Discussion

The strategic risk management at LEGO was identifying and developing leading practices of risk management in an organization. To understand the strategic risk management at LEGO they had to accomplish the goal in the first place (John R.S. Fraser, 2015). The LEGO mission was to inspire and develop the builders of tomorrow using a growth strategy and innovation strategy.  The growth strategy was to increase its market share in the United States and Eastern Europe. The innovative approach creates new innovative products every three years that has never been seen before (John R.S. Fraser, 2015). One way will be building LEGO consisting of family board games. The company intends to expand the LEGO education that works with schools and kindergartens (John R.S. Fraser, 2015).

The enterprise risk management is the first step of LEGO handling strategic risks, and the second step was the Monte Carlo simulation that was added in 2008 to understand the financial performance volatility and integrating risk management into the budgeting and reporting processes (John R.S. Fraser, 2015). The two steps were about damage control, while the last two stages were about the decision process and have risk awareness. The Active Risk and Opportunity Planning (AROP), prepares business projects to go through a systematic risk assessment before making the final decisions about the project. The last steps prepare for uncertainty to ensure long term strategies are relevant for future changes that are different from those planned for (John R.S. Fraser, 2015).

The LEGO Group was missing the strategic risk from their ERM portfolio until 2006, and Hans Lae started looking at strategic risk management. It entirely became a full-time position in 2007. Even though the strategic risk is supposed to integrate with risk management, many companies do not assess and incorporate strategic risk management within strategic decision making and execution (Lae ssoe, 2012). The LEGO Group looked at strategic risk management as an effort to rebuild its bottom line. The journey would not have been possible if the Denmark-based toy manufacturing company did not conduct a strategic assessment. Despite the company experiencing some ups and downs, it has tripled its profit since 2004 (Collins, 2012).

The Chief Financial Officer of LEGO understood how important strategic risk management was to the company, so he instructed Hans to be in charge of the process. The aim was to avoid mistakes of the past and help manage the uncertainties. Lego did introduce strategic risk management in stages by Hans (Collins, 2012). Hans did not have prior experience in risk management at the time he took charge of the process. Hans has been with the company for 25 years and gained knowledge of risk management from the experiences of other companies. He valued the exchange of ideas with his colleagues at the European Council of Strategic Risk management. The network was to establish processes to address strategic risk management within a company (Lae ssoe, 2012).

During the initial process, Hans had to collect the intelligence of 35 specialist managers who contributed their handling to the risk management database and use the tools in helping Lego’s senior managers in their decision-making process (Collins, 2012). The Monte Carlo simulations are one of the tools that companies use to understand the volatility in financial performance and help define risk tolerance. The company created an active risk and opportunity planning process to prepare the business case for massive investments. The strategic risk management has helped Lego dodge some few bullets and also helped avoid disruptions by carefully managing the transitions from one system to another (Collins, 2012).

1.Evaluate one pro and con above proposed description.

Response Requirements:

1. Be 2 paragraphs in length

2.Be supported by the required textbook and one additional reference

Points deducted if the submission: 

Does not use the required textbook as one of the two reference sources 

• • You CANNOT use Wikipedia, LinkedIn articles, blogs, paid vendors, certification websites, or similar sources in academic writing. You CAN use reputable industry articles from publications similar to ComputerWeekly, PCMag, Wall Street Journal, New York Times, or similar sources. Academic journals and popular industry articles are accessible in the university’s library databases and Google Scholar. All references should not have a publication date older than 2005.

• Does not respond to the question(s) thoroughly meaning with more than 2 paragraphs

• Primarily consists of bullet points

• Uses statements such as “I have gone through your post,” “I have gone through your discussion,” “adding a few more points,” “based on my knowledge,” “according to me,” “as per my knowledge,” or similar

• Contains contractual phrases, as an example “shouldn't" "couldn't" or "didn't,” or similar

• Uses vague words or phrases such as "proper," "appropriate," "adequate," “it is obvious,” “it is clear,” “in fact,” or similar to describe a process, function, or procedure

• • • As an example, "proper incident response plan," "appropriate IT professional," "adequate security," or similar. These words are subjective because they have different meanings to different individuals.