Lehman - a case of strategic risk

The bankruptcy of Lehman Brothers in 2008 was a critical event in the Global Financial Crisis, exposing serious fault-lines in the structure of global financial markets and leading to widespread economic disruption. But how did Lehman, a company of over 150 years’ experience in commodities markets, reach such a precarious position? The underlying reason for the failure goes back to a change in corporate strategy in 2006 in which Lehman decided to shift from a “moving” or securitization business to a “storage’ business, with the firm making and holding longer-term, riskier investments.