Which of the following statements BEST describes the difference between fraud and fraud risk?

Fraud and fraud risk are related but different concepts. Fraud refers to an intentional or deliberate act to deprive another of money or property through deception, guile, or other unfair means. Fraud risk, however, refers to the organization’s vulnerability to individuals or groups who might combine pressure, opportunity, and rationalization to commit fraud. In other words, fraud is the actual wrongful act, while fraud risk is the potential that such an act could occur. Option D correctly captures this distinction. The other choices confuse fraud risk with frequency, total criminal activity, or opportunity alone. In fraud prevention and deterrence, organizations must identify and manage fraud risk before actual fraud occurs. Therefore, option D is the best answer.