Definition
Lifestyle Red Flag refers to a standard of living or accumulation of wealth that is inconsistent with an individual’s known income and financial situation.
Context
Lifestyle Red Flag often appears in connection with Fraud, Corruption, or Embezzlement, particularly in the context of Fraud Risk Assessments or investigations conducted by Internal Audit. It may indicate that illicit gains are being generated and used for personal benefit.
Meaning
Lifestyle Red Flag is a classic indicator of risk, as it may point to undisclosed or illicit income, especially for individuals in positions of trust.
Example
An employee maintains a luxury lifestyle that cannot be explained by their salary.
Sources
Suggested citation
wirtschaftsforensik.ch Editorial Team: "Lifestyle Red Flag", in: Glossary, wirtschaftsforensik.ch, https://wirtschaftsforensik.ch/glossar/lifestyle-red-flag/, accessed April 18, 2026.