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FRM Part II · FRM Exam Part II · Case Study: Financial Crime and Fraud

A branch operations manager at a regional bank has been in the same role for twelve years, never takes more than two days of leave, and is the only person who reconciles the suspense account. Which element of the fraud triangle is most directly strengthened by this control environment?

Opportunity is the element strengthened. Sole control over reconciling the suspense account, with no segregation of duties, independent review or enforced leave, lets a person commit and conceal fraud. These are control weaknesses, whereas pressure and rationalization concern the individual's personal circumstances and attitude.

  1. AOpportunityCorrect
  2. BPressure
  3. CRationalization
  4. DMotive arising from personal debt

Explanation

Opportunity arises from weak controls, such as a lack of segregation of duties, no mandatory leave and no independent review. The scenario describes control gaps, not the individual's financial pressure or attitude. Pressure and rationalization are internal to the person and are not evidenced here.

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