Fraud Triangle

The criminologist Donald Cressey built the idea in the 1950s from interviews with convicted embezzlers. Pressure is the motive: personal debt, aggressive targets, fear of losing a job. Opportunity is the means: access to cash or records, weak oversight, too much trust in one person. Rationalisation is the story that makes the act tolerable, such as “I will pay it back” or “the firm owes me”. Remove any side and fraud becomes less likely. Organisations can act most directly on opportunity through controls and segregation of duties, while targets, pay design and culture shape pressure and rationalisation. A later extension, the fraud diamond, adds capability: the position, skill and confidence needed to carry out and conceal the fraud. Auditing standards ask auditors to consider these factors. The model has limits, since it rests on offenders who were caught and rationalisation is hard to observe. Fraud risk workshops still begin with it, even where they go on to add more factors.

A branch accountant at a trading company is behind on a personal loan, so she feels pressure. She alone reconciles the petty cash account and nobody reviews it, which is opportunity. She tells herself that she has worked unpaid overtime for years and is only borrowing. A fraud risk workshop using the triangle would flag the unreviewed reconciliation as the control gap to close first.