The Fraud Triangle – The Key Behaviourial Model
The classic model for understanding the basics of fraud and, in particular, why people commit fraud in the workplace remains the Fraud Triangle. The theory behind the model was developed in the 1950s by the renowned American criminologist and expert on the sociology of crime, Dr Donald Cressey. Dr Cressey was himself in the 1940s a student of another famous American criminologist and sociologist, Edwin Sutherland. Mr Sutherland was the man who first coined the phrase “white-collar crime” in 1939 to indicate “crime committed by a person of respectability and high social status in the course of his occupation”.
Dr Cressey interviewed around 200 convicted fraudsters for his study. He described these individuals as “trust violators” because they had entered the workplace with no intention of stealing. Basically, these were ordinary people who ended up doing bad things. This is a very important observation. Dr Cressey's hypothesis provides a number of fundamental insights that go a long way to explaining why previously law abiding citizens like you and I can, in certain circumstances, be capable of committing occupational fraud. It is essential in my view that directors and managers are aware of the Fraud Triangle and understand the key messages contained within it if they are to manage fraud risk successfully.
Dr Cressey's research was published in 1953 in his work Other People's Money: A Study in the Social Psychology of Embezzlement ...