Managing Fraud Risk: A Practical Guide for Directors and Managers

Profile of a Fraudster

Introduction

So, who does commit internal fraud? The first thing to say is that there is no such thing as an identikit picture of a typical fraudster. Whether we like it or not, most of us, under certain conditions and pressures are capable of engaging in this form of criminal behaviour. However, there has been research and analysis work carried out looking specifically at those individuals who are responsible for internal fraud in an attempt to discern characteristics of those who commit fraud.

We look at fraud risk factors throughout this book, but it is worth setting out the main conclusions coming out of this analysis at this stage. Some might seem at first sight to be counter-intuitive and it is important that directors and managers are aware of them.

The Greatest Risk Lies at the Top

The first thing to say is that it is the people at the top of an organisation (the owners, directors and executives) that represent the greatest fraud risk in terms of potential loss. This might seem surprising but it actually makes perfect sense as they are the individuals with the greatest opportunity to commit fraud by overriding controls. In addition, they are likely to have the ability to conceal the fraud too. Messrs Skilling, Ebbers and Madoff are all good examples of this. Owners and executives commit a relatively small number of frauds compared with those carried out by the employees and managers in organisations but they tend to be high value crimes.

The ACFE ...