Winning Ugly

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc./*

Recently I had an opportunity to see a friend`s daughter play in a regional
tennis tournament.  It brought back a lot of memories from when I also spent
my summers in tournament tennis.  The game has changed a lot from when I was
competitive, but the rules are still the same:  you have to find a way to
win.

My friend`s daughter is a very talented player and is obviously well
coached.  She has a significant amount of athletic talent, has excellent
strokes, is hard working, and very bright; perhaps a bit too bright and a bit
too talented on this given day.  Although she was clearly the better player,
and also highly ranked, my friend`s daughter fell behind in the match.  Her
opponent was in a groove, and also being well coached was ``playing up`` to
the talent of my friend`s daughter.  It seemed the better the tennis stroke
that my friend`s daughter hit, the better the return.  In essence, my
friend`s daughter was letting her opponent get into a groove.  What my
friend`s daughter didn`t notice is that her opponent was not dealing well
with shots that were hit short, or without pace, or shots that she did not
have to run all out for.  In other words, the opponent was having big
success against the best shots of my friend's daughter, but very little
success against my friend`s daughter`s poor shots.

If my friend`s daughter had simply started to play less elegant tennis she
probably would have won.  However she continued to play a very beautiful,
but ultimately losing game. 

Risk management is also like that sometimes.  In our efforts to be state of
the art, and to incorporate best practice, we defeat ourselves against
risk.  Instead of being content with ``winning ugly``, we prefer to lose
beautifully.  Few people remember who was best, they simply remember who
won.