My friend has a pet dwarf hamster and?

Flaky skin in hamsters can be due to any of the following reasons -

Old age - there is nothing that can be done about flaky skin due to old age, fur loss combined with flaky skin is common in old hamster

Mite / Mange - check the hamster's fur for mite or mange. The hamster would also have severe itching symptoms. If confirmed, you will have to use an anti mite spray meant for rodents. The head of the hamster should be shielded to avoid spraying into the eyes and the body sprayed. The cage should be cleaned, sprayed with the anti-mite spray and clean bedding should be provided. This treatment should be repeated as directed on the anti-mite spray. In case of mange, a vet help would be appropriate.

Ringworm - Ringworm is a contagious skin disease caused by fungal infection. The hamster has circular bald patches where the skin is dry and crusty and the hamster may scratch. The hamster should be isolated from other hamsters and any other animals and veterinary treatment should be sought immediately.

Allergies - the main causes of allergy could be bedding, food or environment. Wood shavings and bedding can be replaced with tissue paper to establish if the bedding material is the cause of the allergy, feeding a plain diet for a few days may establish if the hamster is suffering from a food allergy and moving the hamster to a different room may help to establish if it is something in it's environment which is the cause of the allergy.Once the source of the allergy has been found this should be removed and the hamster should recover fairly quickly.