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Manage Your Risk or It Will Manage You

Posted August 02, 2009 4:35 PM by DrDoug

What are the ingredients of greatness? And do athletes and engineers have anything in common. I think that they do. To be great at anything, you need to have a passion for your work and an unwavering confidence that you'll get the job done. That's true whether you're playing in the Super Bowl or the World Series, or engineering products upon which your company's future depends.

But passion and confidence aren't enough. In fact, they just won't matter unless you have great risk management in place. Two great athletes remind us of this fact. Let's take a brief look at the careers of Bernie Kosar and Lenny Dykstra.

Bernie Kosar

Bernie Kosar is smart, talented, hard-working, and generous. He's also an over-achiever. Now in his mid 40s, the former NFL quarterback is divorced and filing for bankruptcy. His battered body is falling apart, too.

Kosar may be broke, but he's not broken. Why? He's a winner who can manage risk. The former NFL star once made millions of dollars, but not making that kind of money wasn't the hard part about adjusting to his life after football. The adjustment to "regular life" was the challenge.

Bernie Kosar knows he can always make money, however. He worked hard to win football games, and will apply that same winning attitude today to get back on top.

Lenny Dykstra

What more needs to be said about a baseball player whose nickname is "Nails"?

In recent times, no one played cleaner, harder baseball than Lenny Dykstra. The former outfielder for the New York Mets and Philadelphia Phillies didn't stop being productive when he made his last MLB plate appearance, however.

So is he a genius? No. But Lenny Dykstra did go on to start a car wash franchise that he sold for tens of millions of dollars. He is an entrepreneur – a winner. And like Bernie Kosar, he's now filing for bankruptcy. But that won't be the final chapter in Lenny Dykstra's success story.

Do you have passion and internal confidence? That's great if you do. But to achieve true greatness, you need to have great risk management, too.

Dr. Doug

Editor's Note: You can visit Dr. Doug online at www.DrDoug.com or by email: DrDoug@DrDoug.com.

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#1

Re: Manage Your Risk or It Will Manage You

08/03/2009 2:12 AM

Yeah,Risk Management is the most risky part of ones career and life.I would like to learn more.

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#2

Re: Manage Your Risk or It Will Manage You

08/03/2009 5:15 AM

I would like to know how Bernie and Lenny get on, their attitude is commendable, as is Doug's faith in them. However all that has been demonstrated so far is their ability to lose money.

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#3

Re: Manage Your Risk or It Will Manage You

08/03/2009 7:33 AM

What is the purpose of this post? Could you explain more clearly what bankruptcies have to do with an engineering career ?

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#4

Re: Manage Your Risk or It Will Manage You

08/03/2009 8:06 AM

Sooooo..filing for bankruptcy is risk management, right? Of course this is true, but are there other ways to manage risk?

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#13
In reply to #4

Re: Manage Your Risk or It Will Manage You

03/16/2012 2:53 PM

Actually, filing backruptcy can be a mitigation in risk management.

Other ways would be controls and triggers set into place prior to avoid it.

And in risk management theres a technique call RAAT,

R Respond (mitigate); This would happen to an unexpect issue

A Accept; Basically sure, I'll take that risk, if it occurs see above

A Avoid; Don't attempt

T Transfer; give someone who think they can handle it, whether do to more experience or resources

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#5

Re: Manage Your Risk or It Will Manage You

08/03/2009 8:18 AM

I've read that Abraham Lincoln went bankrupt 5 times and then became president.

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#6

Re: Manage Your Risk or It Will Manage You

08/03/2009 8:35 AM

Seems to be selling something. Maybe speaking engagements "don't be discouraged". Maybe risk management advice "don't do what I did". I'll bet this blog or versions of it are on file at a variety of "professional" sites. Maybe I'm a cynic.

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#7

Re: Manage Your Risk or It Will Manage You

08/03/2009 9:01 AM

If you are really interested in the art of risk management look into the books, magazines and articles written for and about the equity or commodity trader. Risk management, financially sound money management principles and most importantly the psychology of managing risk are all analyzed. Winning and losing are thoroughly discussed in order to keep a person engaged in this type of activity (or livelyhood) on an even keel. One thing in baseball is that an elite player only needs to get a hit one out of every three times at bat, that's only 33% (nowheres near perfect). Whatever your profession, you don't need to be perfect all of the time. I'm an engineer that has been trading about thirty years part time and when I retire (about a year) it will be full time. Even if I trade only 50%, as long as I exit losing trades quickly, not become emotionally involved and not get greedy with winners... I win. Good luck on your endeavors.

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#8

Re: Manage Your Risk or It Will Manage You

08/03/2009 11:34 AM

Dr.Doug,

Passion and confidence- the two major traits of greatness. The two stories of lost ventures by two great players, show that they have indisciminently invested their hard earned resources. That is some thing connected to poor advisers or poor foresightedness. To be great as a performer or as an achiever is possible by tireless efforts or by in born talents. The issue is connected to over ambitious pursuits, that while investing for an alternate future one should have multitudes of options and play safe with resources, at safe risk level. Many people even after seasons of performance carry on with their earning popularity like cricket stars as commentators, film stars as T.V and so on.

THE VERY CHALLENGE OF LIFE RELYS ON HOW WELL ONE PLAN AND PLAY WITH SUDDEN MADE FORTUNES. THE MAIN DRIVERS ARE WISDOM, ALTERNATE PARELLEL OPTIONS, CONTENTMENT AND NOT THE LEAST- GOOD ADVISERS/ possibly the spouses?

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#9

Re: Manage Your Risk or It Will Manage You

08/03/2009 5:32 PM

If the point is that these guys failed in the risk management part of your Recipe for Greatness, it was too implicit to be caught by most of us.

I would suggest that greatness is more likely to be earned by someone who is more committed to Continuous Improvement, than to someone who is worried about "risk management." We all know those "Cover Your A$$" risk management bozos. They're usually our bosses.

Back to you Dr Doug. If someone is great (or getting there), are they working more on risk management/avoidance or Continuous Improvement?

milo

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#11
In reply to #9

Re: Manage Your Risk or It Will Manage You

08/04/2009 6:40 PM

Milo

GA Only those who have been there know that you can never totally assess present or future risk whereas CI is the hedge that keeps you ahead of the curve. There is no such thing as status quo - you are either growing or dying (and don't know it yet)!

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#12
In reply to #9

Re: Manage Your Risk or It Will Manage You

08/05/2009 2:41 PM

I do not believe it is a binary event. By doing one, you are doing the other.

Dr Doug

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#10

Re: Manage Your Risk or It Will Manage You

08/03/2009 10:52 PM

Bernie Kosar?

Bernie's looking pretty chipper, in the suit and tie, eh?

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