First, Do No Harm

| April 19, 2016

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First, Do No Harm

“First, Do No Harm” sums up the Hippocratic Oath, the one historically taken by physicians to ensure their patients’ overall health. Fulfilling this oath requires doctors to be mostly proactive yet sometimes be purposely inactive. Knowing that harm could be caused by either taking proactive steps or taking no action is part of what makes a physician’s job so difficult. And challenging.

Does this apply at all to today’s financial and regulatory environment? We believe it does.

Having fiduciary responsibilities mean you must first do no harm. The term used most commonly in operating Investment Policy Statements (IPS) is safety. According to the Merriam-Webster Dictionary, one definition of safety is “the condition of being safe from undergoing or causing hurt, injury, or loss.” To provide safety requires people in appropriate positions to know when to be proactive and when to be purposely inactive. It’s key that one must take great care that inaction is not causing harm.

How can inaction cause harm you may ask?

It happens when the real value of your deposits are not being realized. The Investment Policy Statement provides safety by listing the allowable investment vehicles. Typically the IPS will also state that cash flow analysis (to determine appropriate liquidity) be undertaken. Armed with these data, one is better positioned to take action and maximize the return on available dollars. Doing nothing ensures a negligible return, requiring taxpayers to carry a higher burden than necessary or taking budget cuts that could otherwise be avoided.

The financial services environment has changed drastically over the past few years. This means that you must be proactive in recognizing and responding to the new regulations the banks are under. The banks are not the only player in today’s financial marketplace; other investment options are available to you.

Now is time to proactively use your Investment Policy Statement to maximize the return on your dollars—and keep your budget and taxpayers safe.

We hope to see you at some upcoming events:
GFOA of South Carolina 2016 Spring Conference in May
GFOA Annual Conference of The United States in Canada in May

Have any questions or comments for the author? Reach out below!


Peter Forsgren
COO and Co-Founder

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