Prepared by: Shakhzoda Khamidova Mostafa Soleimani Qussai Al - Shater

CONTENT Introduction Innovation of LEGO Group Strategy Risk Management Step 1 Step 2 Step 3 Step 4 PAPA Model Conclusion

INTRODUCTION LEGO is a line of plastic construction toys that are manufactured by The Lego Group, a privately held company based in Billund, Denmark in 1932. It is the third-largest toy manufacturer in the world in terms of sales. The name of the company is an abbreviation of the two Danish words “leg godt” that mean “play well.” There are 13,974 employees.

33 branches in Germany Japan 90 branches in USA Russian Federation China South Africa Korea Taiwan

LEGO

The LEGO Group Strategy The mission is: “Inspire and develop the builders of tomorrow.” Its vision is: “Inventing the future of play.”

Growth strategy Based on a number of growth drivers. One is to increase the market share in the United States. It wants to increase market share in Eastern Europe. It wants to invest in emerging markets.

Innovation strategy LEGO Group focuses on creating innovative new products from concepts developed under the title “Obviously LEGO, never seen before.” The latest example is LEGO Games System, which is family board games with a LEGO attitude of changeability. The company intends to expand LEGO Education, its division that works with schools and kindergartens.

WHAT IS A RISK MANAGEMENT ? It is the continuing process to identify, analyze, evaluate, and treat loss exposures and monitor risk control and financial resources to mitigate the adverse effects of loss.

LEGO Risk Management Step 1: Enterprise Risk Management Step 2: Monte Carlo Simulations Step 3: Active Risk and Opportunity Planning (AROP) Step 4: Preparing for Uncertainty

Step 1: Enterprise Risk Management Enterprise risk management is a comprehensive and integrated framework for managing credit risk, market risk economic, capital risk and etc.

The fields that LEGO Group is using from enterprise risk management are : Strategic risk Operational risk Employee safety Hazard risk IT security risk Financial risk Legal risk

Step 2: Monte Carlo Simulations The idea is to test the various outcome possibilities , well in real word only there is one of the outcome but in terms of risk assessment any of them can be outcome.

Step 2: (continuing) Fields that LEGO Group is using this model are : BUDGET SIMULATION CREDIT RISK CONSOLIDATION OF RISK EXPOSURE Risk appetite

Step 3: Active Risk and Opportunity Planning Projects should defined minimum size or level of complexity its mandatory that the business case includes an explicit definition and method of handling both risks and opportunities.

Common language and reporting Step 3: (continuing) It differs from the former approach to project risk management in several areas: Identification Assessment Handling Re-assessment Follow up Reporting Common language and reporting

Step 4: Preparing for Uncertainty: Defining and Testing Strategies To get further ahead in the decision process, the LEGO Group has added a systematic approach to defining and testing strategies. Four Strategic Scenarios: A group of insightful staff people (Hans and a few from the Consumer Insight function) defined a set of four strategic scenarios based on the well- documented megatrends defined by the World Economic.

The PAPA Model

Papa model When looking at the scenarios, the LEGO Group uses, what it calls a Park, Adapt, Prepare, Act (PAPA) model. Park: The slow things that have a low probability of happening, we park . We do not forget about them. Adapt: The slow things that we know will happen or are highly likely to happen.

PAPA model (Continuing) Prepare: The things that have a low probability of happening, but, if they do, they materialize fast. Act : have the high probability and fast moving things that we need to act on now in order to make sure the strategy will be relevant.

Strategic Risk Management Return on Investment The Strategic and Financial Management Process The LEGO Development Process The Customer Business Planning Process The Sales & Operations Planning Process The Performance Management Process

Conclusion We want to emphasize that risk management is not about risk aversion. If, or rather when, you want/need to take bigger chances than your competitors—and get away with it (succeed)—you need to be better prepared Risk management should enable organizations to take the risks necessary to grow and create value.

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