The Loneliness of the Goalkeeper: Managing Risks

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“The essence of investment management is the management of risks, not the management of returns.”  — Benjamin Graham

The World Cup has arrived in North America. June and July are filled with over a hundred games featuring four dozen of the world’s best teams. The World Cup is a pinnacle of athleticism on a global stage filled with incredible runs, crosses, upsets and heartache. The last men’s World Cup, in 2022, ended in a 3-3 tie after extra time and was decided on penalties. Argentina prevailed, carried by two goals and a decisive shootout penalty from Lionel Messi, a name that transcends the sport.

We celebrate the goal scorers and the strikers. We remember the headers and bicycle kicks, shots from outside the box. But we quickly forget the name of the goalies on the other end of the attack. The goalies who dive and reach for a ball, fingertips being the difference between winning and losing. While we might know Messi, it was actually Emiliano Martínez who turned the final…denying Randal Kolo Muani in the final seconds of extra time, then saving a penalty in the shootout. Had Martínez looked away for even a second, the entire tournament might have turned out differently.

Managing risk is like the goalkeeper. It is the quiet, understated work of wealth management, and often the most important. As London Business School’s Elroy Dimson put it, “Risk means more things can happen than will happen.” In a financial plan, risk management is the goalkeeper: it rarely scores, rarely draws applause, and does its most important work in the moments after everyone else has stopped watching.

Having appropriate insurance coverage is not an exciting topic. Protecting ourselves from risk requires the quickness, foresight, and tenacity of a goalkeeper. None of us expects to face loss and piecing coverage together one decision at a time tends to leave gaps exactly where a family’s legacy and wealth are most exposed. So the key to success in risk management is to appreciate protect against loss in two broad areas: property and casualty, and life and health. Let’s look at some valuable ways to do that.

Building Protection That Holds

A strong risk management plan is less about buying more insurance than about thinking clearly before trouble arrives. A few considerations separate the plans that hold from the ones that look fine until they are tested…

  • Insure the catastrophic, not the inconvenient – Severity matters more than frequency. Cover first the losses that could permanently derail a plan. These derailing events are premature death, a disabling illness, a serious lawsuit, or an extended need for care to name a few. Worry later about the small, absorbable ones. Instead, retain the risk of what you can comfortably afford to lose; transfer what you cannot.
  • Match coverage to your real exposure – The right amount of protection flows from your unique life situation: your assets, your income, your dependents, your obligations. A young family, a business owner, and a recent retiree each stand in a different goal, facing down different potential shots that need to be protected against. Don’t treat them all the same way.
  • Coordinate the pieces – Auto, home, umbrella, life, disability, and long-term care should work as one system, with no gaps between them and no costly overlap. Beneficiary designations and ownership should reinforce your estate plan, not quietly contradict it, so be sure to check them.
  • Revisit on a schedule – and after every major change. Risk profiles will drift over time as life (and your balance sheet) changes. A marriage, a new child, a move, a liquidity event, a teenager who begins to drive…each one shifts the exposure. Coverage set once and forgotten is the financial equivalent of a keeper who stops watching the ball.
  • Weigh the cost of protection honestly. Every premium is a dollar not invested elsewhere, so protection should be right-sized, not maximized. The aim should be to have enough coverage to keep a setback from becoming a catastrophe, not insurance for its own sake.

Successful goalies are wired differently than other players. The Loneliness of the Goalkeeper, a Radiolab and BBC 4 podcast, is a good twenty-minute meditation on the weight of guarding against disaster — and on legacies defined by a single mistake rather than hundreds of saves. The loneliness is the point. A striker can misfire all afternoon and be redeemed by one moment of brilliance; Messi has missed far more shots than he has scored[1]. The goalkeeper is granted no such forgiveness. He stands apart from the run of play, often with nothing to do, and is remembered not for the routine saves no one noticed but for the single ball that slips past.

Risk management asks a family to live with the same quiet reality. Premiums paid year after year for coverage never used can feel like waste…until the year they are the only thing standing between a family and ruin. Protection earns no applause; its victories are the disasters that never arrive, and the legacy that stays whole because someone thought about the unthinkable while everyone else was watching the ball at the far end of the field.

Emiliano Martínez helped win a World Cup with a handful of decisive saves. What set him apart was the ability to stay focused for one more moment. Discipline, experience, and process won the day. When we helping to assess your risks, those same qualities…discipline, experience, and process…are what protect you.

At Sterling, we believe the “not fun” parts of financial planning deserve the same care and expertise as the goals that bring you joy. We strive to help you protect all those you care about, your well-being, and wealth. The goalkeeper stands alone; you should not have to. As you go through life, circumstances shift, and careers evolve, please stay in touch — so the protection around you keeps pace with your life.

 

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[1]Lionel Messi career statistics, ESPN: espn.com/soccer/player/_/id/45843/lionel-messi

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This article is for informational purposes only and does not constitute investment advice. Past performance is not a guarantee of future results. All investments involve risk, including possible loss of principal. International investments involve additional risks, including currency fluctuations and political instability.