Investors Should Cut Risk as Global Woes Add Up: El-Erian

Investors are justified for viewing the Greek debt deal with skepticism and should reduce their risk allocation accordingly, Pimco's Mohamed El-Erian said.

Problems in Greece are just the highest-profile set of geopolitical risks with which the market must deal — the others being Iran and Syria — which could cause disruptions sharply and quickly, said the co-CEO of the world's largest bond fund manager.

"The market is being very rational in saying it's a step but it's not a big enough step yet," El-Erian said of the Greek debt deal announced earlier in the week. "Fundamentally, Greece is going to have to find a way to restore growth and restore competitiveness. If it doesn't do that, private capital isn't going to come in and if private capital doesn't come in you don't get the oxygen that an economy needs."

In addition, the deal, which likely will see bondholders lose more than 70 percent of the principal plus reductions in coupon payments for the Greek notes, faces "implementation risk." The deal still must be approved by components of the Troika — the European Central Bank, the International Monetary Fund and the European Commission — that negotiated the pact. Read more at CNBC