Risk | Certified Fraud Examiner



Risk | Certified Fraud Examiner | Loss Prevention – Atlanta, GA

When an Employer Rationalizes

If you have ever heard a Certified Fraud Examiner or loss prevention professional speak, you may be familiar with the Fraud Triangle that outlines three dynamics for fraud to occur – Pressure, or Need / Greed, Rationalization and Opportunity. Common rationalization themes include: I’m underpaid, overworked; others are doing it, etc.

Ever consider if the employer or decision maker rationalizes bad behavior? Ask a risk management or loss prevention professional if any of these responses sound familiar.

“This is my fault; I didn’t explain the policy clear enough.” – Senior Director of a multi-billion dollar company after a manager used a company credit card to expense personal items.

“He lost his job; there’s no reason to rub salt in a wound.” – Manager’s response after refusing to seek prosecution for employee theft.

“It was a stupid thing to do, but he was just joking around.” – President of a $1B company after an employee wrote a fake hold-up letter and handed it to a bank teller.

Others with my personal thoughts include:

“Perhaps he would perform better under someone else’s leadership?” – He falsified documents and misled investigators.

“Yes, she was deceptive in her statement, but she’s a single mom and I believe we failed to train her properly.” – While being a single mother has pressures, why excuse bad behavior? What signal does it send to a married mother?

Perhaps the most common:

“He did violate company policy and lied about certain details, but he’s our best sales person.” – If he was a subpar sales person, would you look at it differently?

For loss prevention professionals that hold the Certified Fraud Examiner designation, our investigations must be without bias or pressure to slant results. Often, it is not our place to offer recommendations but to report and record. Still, from a risk management and loss prevention perspective, we can sometimes see a train wreck coming.

Of course, every case can be different and unfortunately you must put the obvious in writing (don’t steal). A number of factors can tip decision making one way or the other; but often situations are over-analyzed or indifference enters the picture due to uncomfortable variables.

Hopefully this promotes thoughts on leadership, equitable treatment, legality, consistency and ethics. If you’re not in the legal, risk management or loss prevention field, here a few themes and barriers we’ve discovered.

He’s our top sales producer. My bonus depends on him.

How will this look on me?

The position is very difficult to replace. At least I know what I’ve got.

She’s in a protected class. What if she sues us?

He’s not in a protected class, but what if we still get sued?

His father (and my friend), works here.

She is so nice. What will the staff think?

What if he takes customer’s with him when he leaves?

He was best man at my wedding.

Will he disclose past cases of misconduct on others…or me?

If I do nothing at all, will the risk management or loss prevention department find out?

A View from a Certified Fraud Examiner –

As a Certified Fraud Examiner conducting loss prevention investigations we often identify rationalization on part of the offender and victim organization. While you shouldn’t throw caution to the wind, perhaps a strong dose of leadership which includes ethical behavior, legal knowledge, consistency and knowing your pitfalls, can negate additional problems. Routinely review your risk management program and don’t be afraid to ask for help. A Certified Fraud Examiner can offer a unique perspective.

We understand the compassion felt for a well thought of employee; but history shows if incidents are not handled decisively, the offender often returns. We end up investigating the same people again and usually for something far more serious. Someone once said, “Pay me now or pay me later, but if you pay me later, the cost will be greater.”

Risk Management | Certified Fraud Examiner | Loss Prevention - Atlanta, GA

2 thoughts on “Risk | Certified Fraud Examiner

  1. Great article. The interesting part is not the corrupt nature of the thief, but the psychology of the employer deciding not to pursue. We made that mistake many years ago because we were too close to the person stealing. I wonder if they went on to do the same thing to another employer?

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