Calculated risk

Fraud can be committed by any person, either within or outside an organisation; however, internal fraud is increasingly prevalent in our experience, writes Colum Bancroft of Kroll. The classic Fraud Triangle depicts that (1) motive/ pressure, (2) opportunity and (3) rationalisation of the fraudulent act are the three elements that induce/enable someone to commit fraud. In practical terms, an organisation’s vulnerability to fraud often largely depends on the people on the inside, the business environment in which it operates, the overall corporate culture and the effectiveness of its internal controls.

Colum Bancroft (+852 2884 7788, cbancroft@kroll.com) is Head of Kroll’s Greater China Financial Investigation practice.

Fraud risk assessment (FRA) is a fact-finding process to identify and address those areas of an organisation that may be susceptible to fraud. Differences in geographical distribution, business nature and organisational structure call for a tailor-made FRA process in each case. The methodology selected will depend on a number of factors, including the complexity and size of the organisation, while the FRA team may comprise internal resources, external experts or a combination of the two.