Risks and fraud: A theoretical approach

Abstract

Objective. To explain fraud occurrence —under three theoretical models— and apply it to the organization’s hierarchy. Methodology. Based on the IIA risk outlook for 2021, an exploratory theoretical scope of analysis was constructed. Risks were considered under the umbrella of three fraud theories: Triangle of Cressey; Diamond of Wolfe and Hermanson; and Pentagon of Crowe. Results. Fraud occurrence may be explained by the perpetrator’s position across the hierarchical organization chart: where it is stressed that arrogance from the Pentagon fits the top management position; competence from the Diamond fits the middle management; and need, opportunity and pressure from the Triangle fit mainly the lower management. Conclusions. Fraud was considered under three main models, concluding that it may be explained through different worker motivations related to their management position in the company.