Risk management

GRI 102-11, TR-RA-540a.4

Since 2016, MRS has applied internal procedures for checking corporate risks. Prepared by the General Board of Internal Audit and Risk Management, they include a risk dictionary in the financial, operational, compliance and strategic aspects. 

In 2020, MRS developed and implemented a new assessment methodology focused on the most relevant corporate risks to achieve the Company’s strategic goals (namely, railway accident and operation interruption). The results were submitted to the Board of Directors at the end of the year.


Among the improvements of the new methodology, the following stand out:

  • The selection of risks to be mapped was based on the main offenders to achieve MRS strategy;
  • Creation of the “Risk Focal Point”, which leverages the efficiency and effectiveness of the assessment of risk factors, as well as stimulating the permeability of the risk management culture;
  • Testing, by the Internal Audit, of controls raised in the “Risk Focal Point” for critical risks selected, enabling the assessment of the level of adherence of the control design with its effective execution.

For the deficiencies found in the tests, action plans were drawn up, which will be executed by the responsible areas, with monitoring up to the implementation by the the General Board of Internal Audit and Risk Management. 

Related to:

  • Credit and cash flow (unavailability of capital and cash flow, for example)
  • Market (as exchange rate and interest rate variation)

Both are specifically covered in Internal Policy for Financial Risk Management, yearly approved by the Board.

Concerning operational risks, MRS relies on three different processes for inspecting the Permanent Ways:

  • Geometry inspection, to check for vertical or horizontal rail misalignment faults caused by problems such as fastening, unevenness, ballast compaction, over-elevation, among others;
  • Inspection of internal cracks,which can diagnose faults in the beginning of rail rupture caused by wear, overload, high ballast stiffness, etc;
  • Surface inspection of rail with RIV (rail inspection vehicle), which enables the identification of roughness deviations in the contact area with the rail head wheel caused by contact wear.
Corresponding market laws and regulations (regulatory and environmental contingency).
Related to achievement of the Company’s strategic objectives.


Concerning operational risks, MRS relies on three different processes for inspecting the Permanent Ways:

  1. Geometry inspection, to check for vertical or horizontal rail misalignment faults caused by problems such as fastening, unevenness, ballast compaction, over-elevation, among others;
  2. Inspection of internal cracks, which can diagnose faults in the beginning of rail rupture caused by wear, overload, high ballast stiffness, etc;
  3. Surface inspection of rail with RIV (rail inspection vehicle), which enables the identification of roughness deviations in the contact area with the rail head wheel caused by contact wear.
TR-RA-540a.4.
Processes for inspection of the permanent way  
Parameters
Equipment
Mileage in 2020
Gauge and geometry
TEV
4767
Surface defects and rail profile
RIV
5905
Ultrasound
US
5361

In addition, the VTI (Vehicle Track Interaction) equipment came into operation in October 2020, which inspects the vehicle/rail interaction of the entire network in cycles of approximately every four days.

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