This rule of the day comes from Erik Lindley over at the Brohammer Podcast.
Rule of the Day - 04/18/2011
In previous editions you could remove command models as you saw fit. 8th edition spells it out explicitly.
Unless a champion is slain by a direct attack, then he must be the last rank and file model to be removed as a casualty.
pg 94 - under Last Stand
The only time a standard bearer can be removed as a casualty before the musician and other rank-and-file models is if the unit breaks from combat.
So there you have it, if your unit is down to only the 3 command models you must remove
1 - Musician
2 - Standard Bearer
3 - Champion
In that explicit order.
This is rarely an ideal removal order as you could keep the muso if you thought you might still tie or the Standard Bearer for that +1 CR. But we must play by the rules.