Page 7 - Risk Management Bulletin Jan- Mar 2021
P. 7

RMAI BULLETIN JANUARY TO MARCH 2021


                        iii. Punishment is very light         X  Incentive/Pressure, such as a financial need, is the
                     b. Mitigation factors:                      "purpose" for compelling the fraud.
                        i.  What if security was tight?          Motivation Aspect of the Case Study:
                        ii.  What if comprehensive internal      o   Secretary originally started down her
                            controls require an elaborate            fraudulent path because of financial
                            system?                                  difficulties she found herself in before starting
                                                                     work at the investment bank.
                        iii. What if the likelihood of finding is
                            high?                                o   The motive behind the fraud as primarily
                                                                     greed though, with secretary spending her ill
                        iv.  What if punishment is severe?
                                                                     gotten gains on a luxury lifestyle, including
                 2. Personally Created Opportunities:                villas, cars, jewellery, designer clothes and
                     a. Familiarity with operations (including
                                                                     first class holidays. She has even admitted that
                        cover-up capabilities)                       she did not steal because she needed to, but
                     b. Close association with contractors,          because she could. She explained that she
                        dealers, and other key people (22%)          first started taking money basically to find out
                     c. Unwillingness to share duties (21%)          if she possibly will get away with it.
                 3. Organizational Characteristics:              o   She says that it then developed 'a bit
                     a. Weak internal controls                       addictive' and that she 'got a huge thrill from
                     b. Absence of periodic rotation in job duties   knowing they had no impression what I was
                                                                     doing.
                     c. Constantly operating under a crisis
                        environment                           X  Rationalization: The individual committing the
                                                                 fraud regularlyjustifies the fraud. Justifications
                     d. Little attention to details
                                                                 may include, "I'll pay the money back", "They will
                     e. Poor morale                              certainly not miss the funds", or "They don't pay
             C) Rationalization factors:                         me adequate."
                 1. How can you be proactive and know who will   Rationalization Aspect of the Case Study:
                     rationalize fraudulent behavior?            o   She was able to rationalize her actions by
                 2. Embezzlers don't fit the criminal stereotypes;   convincing herself that she had earned the
                     they appear to be trustworthy, sincere,         money she stole.
                     likeable, sociable, etc.                    o   De-Laurey believed that she earned the stolen
                 3. Personal Emotions that may lead to fraud:        amounts as a just prize for her dedication,
                     a. Strong community or social expectations      discretion and devotion, and claims that she
                        to succeed (6%)                              had the permission of her bosses to take
                     b. Perception of being treated unfairly by      money in return for her 'vital services'.
                        the organization (9%)                    o   She vindicated her activities through the
                     c. Resentment towards superiors                 belief that her superiors had cash to spare.
                     d. Frustration with job                  X  Opportunity The individual committing the fraud
                                                                 sees an internal control weakness and, considering
                     e. Insatiable desire for self-enrichment or
                        personal gain                            no one will notice if funds are taken, initiates the
                                                                 fraud with a small amount of money. If no one
                     f.  Wheeler - dealer attitude (18%)
                                                                 notices, the amount will usually grow bigger.
                                                                 Opportunity Aspect of the Case Study
             Let us examine a case study based on the Fraud
                                                                 o   In terms of opportunity, her bosses trusted
             Triangle:
                                                                     her and held her in high regard. She had
             Case study is of the Secretary Who Stole over £4.3      proved herself crucial, on both professional
             million from her bosses at Goldman Sachs. We will       and personal fronts, and was given access to
             correlate all the aspects of the Fraud Triangle in this  their cheque books in order to settle their
             case study.                                             domestic bills and personal finances.


                                                            5
   2   3   4   5   6   7   8   9   10   11   12