Multiple Choice
Which of the following is a potential cost of avoiding insurance in the context of fraud risk management?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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Which of the following is NOT one of the three elements of the Fraud Triangle that helps explain why individuals commit fraud?
A
Opportunity
B
Rationalization
C
Diversification
D
Pressure
Verified step by step guidance1
Understand the concept of the Fraud Triangle, which is a model used to explain the factors that lead individuals to commit fraud. The three elements are Opportunity, Pressure, and Rationalization.
Opportunity refers to the circumstances that allow fraud to occur, such as weak internal controls or lack of oversight.
Pressure refers to the motivation or incentive to commit fraud, such as financial difficulties or personal problems.
Rationalization is the justification or reasoning that individuals use to convince themselves that committing fraud is acceptable.
Diversification is not part of the Fraud Triangle. It is unrelated to the factors that explain why individuals commit fraud, making it the correct answer to the question.
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