Map of risks for the Russian Railways Group

Risk category Risks
External risks
  • reduction in the volume of freight provided for railway transportation
  • risk of unplanned fluctuations in transportation volumes exceeding the carrying capacity of certain railway sections
  • deterioration in the structure of industrial and agricultural production shipped using railway transportation
  • growth in prices for goods and services consumed by the Russian Railways Group
  • decrease in the Company’s income from passenger transportation due to a decline in the public’s ability to pay
  • decline in investment and business activity in industry and agriculture
  • changes in the directions and distances of cargo flows
  • tightening of tariff and non-tariff restrictions in foreign trade
  • lack of government investments
  • decrease in the Russian Railways Group’s share of highly profitable segments of the transportation market
  • growth in intra-industry and cross-industry competition
  • risk of the quality and range of services not complying with new customer requirements
  • advanced development of alternative types of transportation, including through the accelerated introduction of innovations
  • establishment and full-scale operation of international corridors to bypass Russia
  • lack of production capacity among product suppliers for the Russian Railways Group
  • credit risks
  • currency risks
  • interest risks
  • risk of liquidity loss
  • downgrading of Russian Railways positions by international ratings agencies
  • financial implications from property and liability risks
Workforce risks
  • increased imbalances in the structure of the workforce represented on the market
  • deterioration in the positions of Russian Railways on the labour market
  • deterioration in the quality of the workforce
  • reduction in the working population in remote regions due to the urbanisation of society
  • risk of the diminished attractiveness of professions in the railway transportation industry
  • increased competition for skilled personnel, including due to the deteriorating demographic situation in the country
Regulatory risks
  • continued strict government tariff regulation
  • stricter legislation (transportation, tax, environmental requirements, etc.)
  • lack of legislative regulation for the activities rolling stock operators
  • impact of international sanctions against the country’s economy and activities of Russian Railways
  • deterioration in intergovernmental relations
  • local military operations
  • terrorist impact on facilities of the Russian Railways Group
Manmade, natural and climatic
  • accidents at facilities that support the work of the Russian Railways Group
  • manmade accidents on related types of transportation (primarily in seaport waters and on major highways)
  • fires or natural disasters in areas where the Russian Railways Group operates
Scientific, technical and technological
  • use of new energy resources and energy-saving modes, technologies and materials on alternative types of transportation and when operating infrastructure facilities
  • improving the carrying capacity of vehicles and vessels and their cargo delivery speed
Internal risks
Production and technological
  • lag in infrastructure development compared with the increase in freight and passenger transportation
  • disruptions in the organisation of freight delivery logistics schemes and empty rolling stock
  • disruptions to the plan for making up trains and the train traffic schedule
  • diminished efficiency from the use of rolling stock
  • discrepancies in existing technological processes for organising transportation with the quality requirements for transportation services
  • discrepancies in technological processes with traffic safety requirements
  • diminished reliability of rolling stock, track facilities and structures
  • disruption in the parameters of operations in the technological chain used to maintain the life cycle of a transportation service
Technical and resource
  • continued high level of fixed asset deterioration
  • breach of the deadlines and conditions for supplies of material resources
  • risk of using substandard and incomplete information about consumers of the Russian Railways Group’s services
  • diminished reliability of technical equipment
  • incompatibility of technical equipment and technologies in the transportation process
  • incorrect substantiation and erroneous selection of new investment targets
  • diminished return on investment and failure to ensure planned profitability from invested funds
  • lack of clear guarantees for transportation volume from freight owners when implementing infrastructure investment projects
  • risk of the failure to meet the parameters of the projects implemented (exceeding the budget, failure to meet deadlines or failure to achieve the project objective)
Risks of structural reforms
  • threat of a disruption to the technological processes of the Russian Railways Group and significant financial losses as a result
  • threat of the loss of financial sustainability and the risk of bankruptcy of S&A
  • decrease in the profitability of the Russian Railways Group due to the uncompensated spin-off of highly profitable S&A
  • decline in asset value and capitalisation of the Russian Railways Group in the event of the ineffective work of S&A
Human resources
  • lack of compliance of the professional level of personnel with the requirements of the Russian Railways Group
  • risk of a further increase in the number of employees approaching retirement age
  • outflow of highly skilled personnel due to insufficient motivation and the decreased competitiveness of salaries for employees of the Russian Railways Group compared with other industries
  • professional risks: injury or occupational disease
  • risk of ineffective recruiting, placement and management of personnel
  • violations of labour discipline
  • deterioration in the corporate culture of employees
  • reduced manageability of Russian Railways Group structures
  • adoption of unsubstantiated management decisions
  • failure to execute decisions by the required deadlines
  • failure to achieve target economic and production performance results of the Russian Railways Group