Locating a red team in the organization chart
Initially, I would not spend too much time thinking about where in the organization the offensive security team should be located. If you are just starting out, it's most likely that only one full-time person is tasked with offensive security work. The more critical part at that stage is to get executive sign-off and support to perform offensive testing and deliver results. The bias should be toward action at first and to demonstrate a positive impact. In some organizations, the program is entirely outsourced, and only logistics are driven internally, although typically the desire to build an internal team will grow.
A typical organization structure will probably put the offensive security team in either the defense and response part of the company or as a function of a Security Assurance team. I have also seen offensive security teams being put in legal and compliance areas of companies. A lot of this depends on the size and structure of the organization, as well as the size of the offensive security team itself.
A great place, and personally my favorite, is a staffing function that informs leadership (for example, the vice president, CEO, or CISO) as an independent group. This allows for great autonomy and provides leadership direct, unfiltered input into the state of security.
In most cases, however, the team will be buried somewhere deeper down in the organization chart, and that is okay. I don't like it when a penetration test team reports to a defensive team (for instance the blue team lead), as that might provide the wrong impression of its core purpose. The offensive security team is an adversarial team with the goal of helping the organization, but its behavior and actions must maintain a level of independence and freedom.