Sugar Cookies

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

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Growing up, the sugar cookies that my mother made were one of my favorites. 
However reading an abridged transcript of a convocation address in the Wall
Street Journal by Adm. William H. McRaven gave me another thing to think
about when someone mentions sugar cookies.  Adm. McRaven was addressing the
graduates of the University of Texas at Austin and explaining "Life Lessons
From Navy SEAL Training",
http://online.wsj.com/news/articles/SB10001424052702303480304579578012692476736?mg=reno64-wsj
[2]

In Adm. McRaven's speech, he describes a sugar cookie as a punishment you
receive when failing uniform inspection.  When you failed uniform
inspection, you were required to run fully clothed into the ocean, and then
while still soaking wet roll around on the beach until you were covered in
sand.  The rest of the day would then be spent in your cold, damp and sandy
outfit.  This effect was known as a Sugar Cookie.

Notice that it was "when" you failed inspection and not "if" you
failed inspection.  Adm. McRaven's point was that at some point of time we
are all going to fail and fall short of our standards.  You simply cannot
pass each and every time.  In Adm. McRaven's words, "Sometimes, no
matter how well you prepare or how well you perform, you still end up as a
sugar cookie."

I think this is an important lesson for risk managers and for those who deal
with risk management.  "Sometimes, no matter how well you prepare or how
well you perform, you still end up as a sugar cookie."  And this is
despite the fact that my mother used to make them as a reward for my doing
good.


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