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6.2.3 Risk and the business environment

This photograph shows an Enron 'E' statue lit up.
Figure 4 The US energy and services company Enron collapsed in 2001.

How can we explain situations where people appear to ignore or go along with organisational malpractices? In these situations, why do they not report their suspicions when they discover, for example, fraudulent activities or rule breaking?

A number of reasons come to mind, including:

  • uncertainty about whether the activity spotted is actually fraudulent or non-permitted
  • fear that reporting one’s suspicions could have adverse consequences – for example, loss of one’s job
  • the view that if everyone else is ignoring the issue, then why should I take the risk by reporting it.