A criminologist, Donald R. Cressey, coined the Fraud Triangle (2). It describes the three main causes fraud and corruption. In any organisation, 2 out of every 3 people will commit fraud if all the three conditions are present i.e. they have pressure (incentive or motive), opportunity (absence of controls) and rationalization (justification for wrongdoing).
It is a human condition to want to get rich quick, leave beyond our means, show appearances, want to live in a house costing a monthly rent of Ugx 500,000 when our monthly salary is just Ugx. 600,000! Sometimes it is due to peer pressure or just pressure as a result of poor financial choices like borrowing a loan to buy a car when we lack adequate cash flows to meet the monthly repayments. People with a gambling problem, for example, could expose themselves to too much pressure that could cause them to commit fraud. Yet, some organizations provide incentives like bonuses for work well done. If you get a promise for the 13th cheque upon good performance, the staff may get a reason to cook the books to show good performance even when the company performed poorly. Taken together, this is what Cressey referred to as motive, incentives, or pressure. Take note that people put themselves in “pressure” situations.
I could go and on.
Figure 1, is the fraud diamond, it adds a fourth leg – means or capacity to commit fraud. The 4th leg helps in suspect profiling. Anyone who meets the four characteristics in addition to all the three in the fraud triangle can be suspected of any fraud or crime. The fraud triangle (2), on the other hand, helps in understanding the psychology of the fraudster.
Predication or assessment of whether an allegation and list of suspects are reasonable can be easily done by the analysis of initial facts against the fraud diamond. Someone with motive, opportunity, rationalization and means is a good suspect. They have everything needed to pull off a fraud.
The good news the fraud diamond can easily be applied in any situation.
Do you find some small items lost at your home or office? Your suspects are closer than you may think.
Copyright Mustapha B Mugisa, Mr Strategy 2021. All rights reserved.