Which components constitute the fraud risk triangle?

Which components constitute the fraud risk triangle?

• A. Pressure, opportunity, and rationalization
• B. Pressure, cash, and incentives
• C. Opportunity, control risk, and detection
• D. Rationalization, governance, and ethics

Answer: (B)

The test focuses on the three elements that must be present for fraud to occur: pressure, opportunity, and rationalization. Fraud typically happens when someone faces a personal or financial pressure, has an opportunity due to weak controls or access, and can rationalize the behavior to themselves. The option that lists these three components exactly—pressure, opportunity, and rationalization—is the best choice because it reflects the complete trio that enables fraud to happen. The other options mix in concepts that aren’t part of the triad: for example, cash or incentives try to substitute or reduce one element, but don’t capture the full three-part structure; control risk and detection are audit-related concepts, not elements of the fraud triangle; governance and ethics are broader organizational factors, not the specific trio that drives fraud.

The test focuses on the three elements that must be present for fraud to occur: pressure, opportunity, and rationalization. Fraud typically happens when someone faces a personal or financial pressure, has an opportunity due to weak controls or access, and can rationalize the behavior to themselves. The option that lists these three components exactly—pressure, opportunity, and rationalization—is the best choice because it reflects the complete trio that enables fraud to happen. The other options mix in concepts that aren’t part of the triad: for example, cash or incentives try to substitute or reduce one element, but don’t capture the full three-part structure; control risk and detection are audit-related concepts, not elements of the fraud triangle; governance and ethics are broader organizational factors, not the specific trio that drives fraud.