Lessons from LEGO for Risk Management

October 2022

Lego, the coloured plastic brick, needs no explanation – it has existed for more than 60 years, is in every respectable toy shop around the world, has theme parks almost literally built out of it and even has Marvel & DC Comic movies based around its brilliantly coloured bricks.

Why do we all love Lego?

  • It’s simple: a concept so simple almost anyone can do it, you just put the bricks together and create something
  • It‘s adaptable: the basic idea has stayed the same, yet it has adapted with latest developments and technology
  • It’s scalable: The vast range is so huge already yet there is still so much more that can be done
  • It’s satisfying: I had to put this down as it is SO true. It’s incredibly fun to just stick two bricks together, let alone build a set
  • It’s good value: You pick the bricks for your budget and know what you are getting

Sad though it is, this got me thinking about how risk management really should work.

A Lego brick on its own is nothing special. But link some of them together, and you could end up with anything from a medieval castle to a pirate hideout or a spaceship. Similarly, good effective risk frameworks should be fashioned from a number of simple, repeatable processes that can be integrated and adapted and scaled with developments in your business over time.

In the case of Lego, every brick in Lego’s history has remained compatible with other bricks in one way or another. A 60-year-old brick will still lock together with a modern one. This is only possible because Lego bricks are made according to a specific fundamental set of design rules.

Risk, like every other facet of a well-managed business, should integrate seamlessly according to a fundamental set of rules. It’s amazing how many off-the-peg risk management solutions I see that do exactly the opposite, making the management of risk its own distinct science rather than a living, breathing part of the business model. Again, I say it’s how those fundamental risk management technicals are applied and played with that brings about a successful and business-enhancing outcome.

Having fun identifying new opportunities, building robust products and services, and learning when things don’t go exactly to plan is something that both Lego and risk management have in common. Taking intelligent risk decisions is and should be fun and can also fuel innovation. I had the pleasure of listening to the former Risk Director at Lego, Hans Læssøe, speak at the inaugural RiskNZ Risk & Resilience conference in August, where he energetically encouraged the risk professionals in the room to “prepare to dare” and be brave to take intelligent, informed risk decisions and reap the significant benefits of seeing risk management as an enabler and not just about risk elimination.

Risk management should be good value, whether you are a major New Zealand Bank, small Investment Manager, or a Financial Services start-up, the principles are the same, work out what stops you from being successful and manage that with passion.

To this end, good risk management is about balancing and integrating your people and your processes. An organisation can survive and may even thrive if it has good people and bad processes, but won’t go far if the reverse is true. At the end of the day, a company’s risk profile is driven by the decisions and actions of its People. It’s not just about fancy tech systems but instead building something that works your business, with your business and is “fit for purpose”.

Our world is a gigantic construction set – good risk management, like “old-fashioned Lego”, relies on a surprisingly small variety of fundamental building blocks, which, if applied well and consistently, can help you build and grow some of the most amazing and successful businesses.

Here at Mosaic, we have talented Risk and Compliance expert practitioners who can advise and support you to understand how simple, adaptable, scalable, satisfying and value-adding your risk management approach can be. It really should be this easy, and we can help you regain control and have fun doing it!