Guide to Preventing Workplace Fraud - Chubb Group of Insurance ...

The Fraud Triangle
What motivates people to commit fraud? Criminologists have identified
three elements that are often present when fraud occurs. These three
elements form the “fraud triangle.” 1
OPPORTUNITY
PRESSURE OR
INCENTIVE
RATIONALIZATION
The Fraud Triangle
“Opportunity” refers to the situations and circumstances that make it
possible for fraud to take place. For example, an employee with uncontrolled
access to company funds has the opportunity to misappropriate those funds.
Opportunity is, generally, the element that a business can most effectively
influence, impact, and control. An important action a business can take to
reduce crime exposure is to assess the opportunity for fraud and respond
accordingly. Responding to fraud risk includes development and use of
effective internal controls to reduce, mitigate, or even eliminate
opportunities for fraud.
“Pressure or incentive” helps explain why and when fraud occurs. Fraud
takes place when fraud pressures or incentives outweigh, and ultimately
1 Dr. Donald R. Cressey is generally credited with developing the concept of the fraud triangle,
according to the 2005 Fraud Examiners Manual (Association of Certified Fraud Examiners).
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