The Triangle of Fraud

The Triangle of Fraud.

In an earlier article I talked about the three major characteristics of a Fraudster. In this post, I will go into further detail. The first element is Opportunity. Employees that would fall into this category would be employees that are very trusted, sometimes very long term employees. Perhaps they are in a position of authority that would discourage other employees from questioning their actions. In any event, they have access to the assets and are considered unlikely to steal.

The second characteristic is Pressure. This is defined as having a Nonsharable Problem. This could be having a drug problem, gambling addiction, family medical problems, etc. In any event, the employee does not feel that he/she can share the problem with the company, usually because it would cause personal humiliation or a loss of face.

The final element is Rationalization. Did you know that many Fraudsters do not consider themselves bad people? They tend to think of themselves as victims of unfair circumstances. Sometimes they think that they are just borrowing the money and that they will pay it back. Other employees think that they are grossly underpaid and taken advantage of, thus they are just equalizing the scales. In any event, the ability to rationalize their actions allows them to begin and continue the Fraud.

When you think about your employees, do any of them share these characteristics? If so, it would be prudent to stay aware.