FRM Part II · FRM Exam Part II · Case Study: Financial Crime and Fraud
A bank's risk function wants to lower fraud risk by acting on the opportunity side of the fraud triangle. Which action most directly targets opportunity?
Separation of duties between initiation and settlement, with access recertification, targets opportunity because it removes the ability to commit and hide fraud unilaterally. Assistance programmes and lower targets address pressure, while ethics training addresses rationalization, so they do not act on opportunity directly.
- AIntroducing mandatory separation of duties between trade initiation and settlement, with periodic access recertificationCorrect
- BOffering an employee assistance programme for staff in financial hardship
- CRunning annual ethics training that stresses the bank's code of conduct
- DReducing unrealistic sales targets that push staff to misreport
Explanation
Opportunity is reduced by control design: segregation of duties and access recertification limit the ability to commit and conceal fraud. The assistance programme and the target reduction address pressure. Ethics training addresses rationalization and culture. Therefore only the first option acts on opportunity.
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