ABSTRACT
In order to gain a perception of ethical risk in relation to a specific organisation, it is useful to understand the psychological mechanisms that drive men, by nature selfish and greedy, to adopt unethical conduct. The fraud triangle theory explains the psychological dynamics that lead people to behave in one way rather than in another in relation to their sense of ethics. According to the fraud triangle theory, the risk of consciously adopting unethical behaviour is significantly high when the following three elements co-exist: Psychological pressure, opportunity, and rationalisation. Transferring ethical risk to suppliers or business partners, that is, transferring particularly delicate and fraud-prone processes, does not often offer any advantage. The only case in which a Transfer strategy can be useful is the instance that all the damages, including the collateral ones, related to the discovery of the unethical behaviour can be borne by, for example, an insurance company.
