According to Merriam Webster's Dictionary, Fraud is the intentional perversion of truth in order to induce another [person or company] to part with something of value or to surrender a legal right. This can be either through statements or conduct. The probability of fraud occurring is largely based on human factors and has less to do with account balances or the nature of the business conducted. Donald Cressey developed the concept of the Fraud Triangle while working on his doctoral thesis at Indiana University in the 1950s. The triangle was a visual representation of the three main factors that he indicated had to be in place for fraud to occur. These were as follows:
1) Perceived Opportunity: This can be as simple as an open safe in the office, access to inventory or the ability to manipulate the general ledger. A person has to visualize an opportunity for gain.
2) Incentive/Pressure: People can feel pressure to achieve sales numbers or pay medical bills for a sick family member. The things that pressures one person may not affect someone else so these are relatively subjective. The incentive can be simply greed or desire to maintain a lifestyle beyond someone's means.
3) Attitude/Rationalization: Cressey indicated that humans need to feel their actions are justified. Examples of rationalizations are that "the company owes me for working all these hours", or "this person is rich and they will never miss the money."
The probability of Fraud occurring is a balance between these three factors and mitigating controls within the organization. For example, a company may require an individual to work behind a counter with access to inventory and a cash register. This may be a necessary risk to conduct business, but regular cash counts, periodic inventories and security cameras my reduce the perception of opportunity. Paying a fair wage and benefits commensurate with the market may reduce incentive or pressure. Also, establishing realistic sales goals and compensation structures may lower employee pressure to commit fraud. Finally, the rationalization factor can be mitigated by a strong tone at the top (lead by example) and a clearly conveyed code of conduct. Examining your organization's controls from the standpoint of these human factors may assist you in determining the overall probability of fraudulent behavior within your organization.
Probability, Severity, and Exposure
There are three factors of 2 on a regular six-sided die. Therefore, it is 3/6, or 1/2.
The probability is 1/36
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Since the probability of getting tails is 50% or 0.5, the probability of three tails would be 0.5*0.5*0.5=0.125 or 12.5 %
2/6 or 1/3 or 0.3333.
The probability of of rolling three ones on three dice is (1 in 6)3, or 1 in 216, or about 0.004630.
The probability of flipping three tails with three coins is (1 in 2)3 or 1 in 8 or 0.125.
The probability is 0.0322
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The probability is 3/8.The probability is 3/8.The probability is 3/8.The probability is 3/8.
If a fair die is thrown often enough, the probability is 1.For the first three throws of a fair die, the probability is 1/216.If a fair die is thrown often enough, the probability is 1.For the first three throws of a fair die, the probability is 1/216.If a fair die is thrown often enough, the probability is 1.For the first three throws of a fair die, the probability is 1/216.If a fair die is thrown often enough, the probability is 1.For the first three throws of a fair die, the probability is 1/216.