Controlling and monitoring risk.

SBB operates a risk management system, coordinated between the Group and its responsible operating divisions, to identify risks at an early stage, and subsequently to analyse, evaluate and manage them. It is based on the principle that risk management is a fundamental duty of line managers.

Since 2003 SBB has operated a risk management system at Group level, coordinated with strategic planning, that meets the needs of the Board of Directors and the Management Board. Risk assessment is based mainly on standardised interviews with 43 line managers. The component risks thus identified are then assessed on the basis of a standardised risk matrix.

The line managers interviewed are obliged systematically to identify and document risks existing in their areas of responsibility, and to employ suitable measures to manage them. The round of interviews conducted in 2007 clearly indicated that progress had been made with the establishment of these operational risk management systems at the level of individual divisions and business units. In a number of areas, however, systematic risk identification and management are still inadequate.

A whole series of measures, based on the results of a broad-based internal audit, is in the process of implementation. Accordingly, 2008 should see a significant improvement in the quality of operational risk identification at the units singled out as deficient.