The Fraud Triangle

One of the older and more basic concepts in fraud deterrence and detection is the “fraud triangle”; a phrase coined by the criminologist Donald R. Cressey in the 1950s. The three key elements in the fraud triangle are opportunity, motivation, and rationalization.

The opportunity to commit fraud is possible when people access to assets and information that allows them to both commit and conceal fraud.  

Motivation is a pressure or a “need” felt by the person who commits fraud. It might be a real financial or other type of need, such as high medical bills or debts. Or it could be a perceived financial need, such as a person who has a desire for material goods but not the means to get them. Motivators can also be nonfinancial. Addictions such as gambling and drugs may also motivate someone to commit fraud.

Lastly, people may rationalize this behaviour by determining that committing fraud is OK for a variety of reasons. For those who are generally dishonest, it’s probably easier to rationalize a fraud. For those with higher moral standards, it’s probably not so easy. They must convince themselves that fraud is OK with “excuses” for their behaviour.

A thief may convince himself that he is just “borrowing” money and will pay it back one day.

Others believe that they “deserve” to have money stolen because of bad acts against them.

All students of anti-fraud principles — whether in higher education or on the job —eventually learn about the seminal Fraud Triangle. We can find this diagram in fraud examination, accounting, auditing and marketing literature. The Fraud Triangle is universally accepted in almost every setting in which fraud is described or analysed.