Report on Lego’s Strategic Risk Management
Lego is among the most reputable toy manufacturing companies globally. Ole Kirk Christiansen started Lego in the mid-20th century. It deals in wooden toys, plastic toys, board games, blocks and theme parks. Moreover, the company has a reputable risk management strategy.
Lego’s risk management director says to achieve a renowned risk management status; he enjoyed complete support from the company’s management in terms of tools and processes. Lego approaches to risk management employ a triple effort targeting three things. On definition, Lego has a process based on scenarios that they project risks and formulate counter-management processes based on extrapolations.
In implementation, they advocate opportunity planning, active risk, and management that is crucial for key corporate projects. Their strategy execution uses an ERM database that collects, documents and assesses risks to enable them to define total risk exposure against a set of values that determine their tolerance.
Hans believes Mario Andetti’s phrase that equates slow progress with smooth running of operations distinguishes risks aversion from risk management. Furthermore, he explains that it is his duty to ensure an equilibrium between risks and opportunities and not to avoid risks. Hans asserts that the reason people fear SRM might be because of their view of it as a step of compliance controlling. He defines ERM to include operational disruptions, insurance programs, IT security, and SRM that covers risks that compel them to alter management strategies.
Hans holds Monte Carlo’s simulation in high regard akin to a useful tool that consolidates risk portfolio through provision of insight. In the eyes of Emily Holbrook, Lego’s plan to expect and deal with the unexpected and effective use of ERM database is the secret behind their success in ERM. Hence, it is evident in the cases they have handled in the past.
