Final answer:
An organization must take all of the listed steps to successfully prevent fraud: creating the right environment, identifying control weaknesses, and considering fraud risks, along with investing in resources and fostering a culture of ethical behavior.
Step-by-step explanation:
To successfully prevent fraud, an organization must 3) All of the above. This includes taking proactive steps to create the right kind of environment, identifying internal control weaknesses, and explicitly considering fraud risks. Creating the right environment involves fostering a culture of integrity and ethical behavior, which can help deter fraudulent actions by making them more noticeable and less socially acceptable. Identifying control weaknesses is critical, as these are often the areas that present opportunities for fraud to be committed. Explicitly considering fraud risks means acknowledging that fraud can occur and actively looking for ways in which an organization might be vulnerable.
Organizations should also invest in technology and human and physical capital to solidify their defenses against fraud. By providing incentives that align with ethical behavior within a market-oriented economic context, employees are more likely to focus on long-term success and compliance. Bureaucracies should also be considerate of the risks of protecting their reputations over the ethical requirement to report misconduct, as doing so reinforces a culture where wrongdoing can be reported without fear of retaliation.