Collective Investment Funds

Strategic Risk

This risk is a function of the compatibility of an organization’s strategic goals, the resources deployed in support of those goals, and the quality of implementation. Offering a CIF in conjunction with other fiduciary services is often less expensive than managing individual portfolios, and administering a CIF can indirectly increase a bank’s value to shareholders. The business requires, however, a substantial provision of financial, human, and technological resources. A bank’s information systems, product development, and personnel expenditures must be appropriate for the diversity and complexity of the CIFs administered. If they are not, the result may be poor earnings performance, wasted capital, and diminished shareholder value.

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