Map of risks for the Russian Railways Group

Risk category	Risks
External risks
Macroeconomic	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
Market	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
Financial	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
Political	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
Investment	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
Management	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