If perceived pressure and opportunity to commit fraud are high and personal integrity is low, then the risk of fraud is?

When perceived pressure and opportunity to commit fraud are high while personal integrity is low, the risk of fraud becomes significantly elevated. This scenario aligns with the Fraud Triangle, which highlights that fraud can occur when these three elements – pressure, opportunity, and rationalization (or integrity) – converge.

High perceived pressure often stems from financial difficulties, work-related stress, or unrealistic expectations that compel an individual to consider fraudulent actions as a viable solution. Coupled with a high opportunity to commit fraud, resulting from inadequate controls or oversight, individuals feel they can engage in fraudulent behavior without facing immediate consequences.

At the same time, low personal integrity implies a lack of moral constraints to deter someone from committing such acts. Individuals with low integrity are more likely to rationalize their fraud as acceptable, further increasing the likelihood of fraudulent actions occurring.

The combination of these factors creates a perfect environment for fraud to thrive, hence categorizing the risk as high. This highlights the importance of implementing robust controls, enhancing ethical training, and fostering a culture of integrity within organizations to combat such risks effectively.