Enterprise Risk Management at Lehman Brothers

In 1977, Lehman merged with Kuhn Loeb & Co., which had helped finance, the railroad industry. Kuhn Loeb had significant business overseas dating from the turn of the century, when it helped the Japanese government finance the Russo-Japanese War.

By 1984, Lehman Brothers Kuhn Loeb was torn by infighting among its partners and managers and was ripe for a sellout to Sanford Weill, who had sold his Shearson brokerage to American Express and become that company's president. He was attempting to assemble a financial supermarket and needed an investment-banking firm.

It had to struggle to increase sales and cut costs. The firm overhauled leadership, cut extravagant personnel costs, and introduced its Restricted Stock Unit employee ownership program. In 2002, Lehman strengthened its Asian operations by agreeing to purchase a minority stake (in convertible bonds) in South Korea's Woori Financial Holding Co.- the country's second-largest financial services firm - along with a portfolio of Woori's non-performing loans.

Also in 2002, Lehman created a $1.6 billion real estate fund. The company also acquired a 6.5% stake in car maker, Ferrari from Italian merchant banker Mediobanca in September 2002.