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The Fraud Triangle

What is the Fraud Triangle?

Fraud is any intentional deception engaged in for personal gain. Whether that personal gain is cash or even raw materials off the worksite, it is stealing. Donald Cressey, a criminologist, found that there are three factors that go into pushing someone to commit fraud. The three main components of the fraud triangle are perceived pressure, opportunity, and rationalization. If all three of these factors are present, there is a very high probability and risk that fraud will occur.

The Fraud Triangle Components


The person who is going to potentially commit the fraud has a very high perceived financial need and it is generally something that is not sharable with other people. With that being said, they are in a financial situation where they don’t feel comfortable. They have some financial needs that they don’t think that they can meet on their own and so then they would turn to the fraud. Here are a few scenarios:

  • They can’t just go and talk to a family member because they don’t want to be a burden on them, can’t borrow money from a bank, maybe they tried all the above then got turned down

  • Bad habits such as a gambling problem, very high medical debts, etc.


In order to commit fraud, the person also needs the opportunity to do so. You cannot steal cash if you never have any access to cash. So, the person needs not just an incentive to commit the fraud, they need to have the opportunity, which is the most crucial factor. Available opportunities for committing fraud give motivation to the fraudsters to commit the fraud. Opportunities, in this case, mean there are no internal controls there to prevent the person from doing the fraud. Here is an example:

  • If we just have cash laying around, then the person has the opportunity to take the cash. However, if there’s some kind of internal control in a place where the person is never able to access cash, then they would not have the opportunity to steal the cash.


The final piece to is then they need to be able to have the attitude to steal. This attitude tells them in their mind that it is reasonable for them to go and commit this fraud, which is rationalization. This step helps them justify stealing so they may not feel as responsible. The reason for rationalizing to themselves is because most of the people that commit fraud are decent people that are just struggling with pressures, cannot turn down the opportunity, or both. They are not going to just one day wake up and decide to commit fraud because they are mischievous. Here are a few examples of attitudes someone might think to confirm their actions:

  • “I’m underpaid. This company doesn’t pay me what I’m worth, so it’s okay for me to steal the money.”

  • “I’m really just borrowing the money. This is a loan and I fully intend to repay the money back.”

  • “The company is very wealthy. They have a bountiful amount of money and they can afford to lose a few hundred grand.”

  • This is a victimless crime, it’s just a corporation I’m stealing from.”

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