What is the fraud triangle?

The "fraud triangle" is a criminological model developed by Donald Cressy that explains the reasoning behind the decision to commit fraud. It consists of three components: rationalization, opportunity, and pressure.

• Rationalization: This element involves the perpetrator convincing themselves that they deserve the gain from the fraud or that it is justified given their situation or circumstances. This can lead individuals to commit acts that they might otherwise see as unethical.
• Opportunity: This refers to the actual ability to commit fraud, which can depend on the person's situation and the controls (or lack thereof) within their environment.
• Pressure: This element is about the internal or external pressures that drive an individual toward fraud, such as financial need, the expectation to maintain a certain lifestyle, or workplace demands.

The fraud triangle helps in understanding both the occurrence of fraud and the psychological and situational factors that facilitate it 1 2.