Centralized. Here, the risk function closely controls and owns most of the risks (an arrangement that
is often used for foreign exchange (FX) and commodity risk hedging) while remaining risks are overseen
by line managers, with double-checking or even close supervision provided by the central risk function.
Risk-related models typically reside in the central risk group and are rolled out and updated consistently
throughout the company. The risk function challenges the assumptions made by businesses and
enters into detailed discussions with them. As a result, the central risk department often also assigns
responsibilities for individual risks and business departments to its dedicated employees.