Wells Fargo 's Strategy Is Based Upon Relationship Focus

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Wells Fargo’s strategy is based upon relationship focus, competitive advantage, reputation, price for risk, conservatism, operational excellence, and clear accountability (Perez, 2014). In fact, their relationship focus is measured based upon how efficiently, effectively, and prudently they serve their customers (Perez, 2014). As for price for risk, their business operations are conducted in a way to address risk to capital and only retail risk when there is sufficient evidence for a return (Perez, 2014). Notably, all banks are faced with credit risk, but there are choices, such as: avoid the risk if it is economically unviable, accept risk if it is justifiable, diversify the bank’s portfolio, or liquidate risk by transferring to another party (Perez, 2014).

Credit risk consists of three parts: the size of the exposure at the time of default, the probability of default occurring, and the loss if the credit event occurs (Fraser & Simkins, 2010). Undoubtedly, a combination of a clear strategy, a knowledge of analytical tools, an understanding of the risk management instruments, responsible oversight, and the ability to be intuitive is crucial to risk management (Bethel, 2016). Wells Fargo is one of the most successful banks in the United States in managing risk. Successfully, they have navigated through risk by choosing a course of action determined by their risk management process (Perez, 2014).

Apple’s strategy is extremely innovative and somewhat risk averse as

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