NS works on the basis of the Hearts & Minds model to control safety risks. The key risks have been identified for each domain and are being managed accordingly. These risks were reassessed in response to the COVID-19 pandemic, and new measures were taken where necessary.
• Rail travel is one of the safest forms of mobility. NS seeks to continue improving safety by controlling safety risks and continuously improving safety performance. To ensure effective control across all the operations involved, clear governance roles have been assigned to the various business units alongside the central Security function. Considerable progress has been made, but more work is needed in some areas (including Cyber, see risk 9) to reach the desired maturity.
The control of compliance was further strengthened in 2020, as part of a multi-year integrity and compliance programme. The management of compliance risks has been deepened and broadened in consultation with the business. In addition, compliance policy, monitoring and accountability were further expanded.
• The NS code of conduct was renewed and the policy management framework was further expanded. In addition, further efforts have been made to increase compliance knowledge and awareness, including through NS-wide training in the areas of integrity, competition and privacy. The NS Risk Framework has been further developed so that compliance is effectively factored in.
Revenue fell sharply in 2020, and expectations for future years are also substantially lower due in part to more working from home. In addition, a new economic recession is not inconceivable.
• Various studies have taken place to understand changing travel behaviour, and traveller forecasts are updated with greater regularity. Based on this, investments and services are adjusted as necessary.
The COVID-19 pandemic has disastrous consequences for our financial return. In order to balance spending with this, NS has established a €1.4 billion savings programme for the Dutch organisation, which will require a significant transformation.
• A dedicated team has been set up to drive the transformation and develop savings initiatives for direct and indirect employees. This seeks to realise cooperation with social partners and employees. Savings for 2020 have already been implemented and several requests for advice have been submitted. Investment plans are adjusted and put on hold if possible. Forecasts are periodically recalibrated and progress monitored.
5. Foreign operations:
Abellio UK has revenue risk on train contracts. Contracting authorities have assumed the revenue and cost risk as of March 2020. In order to be able to prematurely terminate the existing contracts and claim a new form of contract, a termination payment will be agreed upon.
• Abellio is consulting with contracting authorities in the UK and Germany on adjusting contracts so that at least a break-even result is achievable in the future. The financial risk for NS is limited to the guarantees issued for the Abellio entities. For a few contracts in the United Kingdom, the financial risk is shared with joint venture partners.
6. HSL South:
Performance and risk management continued to improve in 2020, and the shortage of seats did not occur due to the impact of the COVID-19 pandemic. The KPIs are sensitive to risk factors associated with the complexity of HSL South. The ICNG delivery has been delayed and new arrangements have been made with the Ministry of Infrastructure and Water Management.
• HSL South Improvement Programme is working with ProRail on further measures to improve operational performance. The Ministry of Infrastructure and Water Management’s infrastructure improvement package of €60 million has been extended to the end of 2022, which means that infrastructure quality will lead to fewer train cancellations.
As a consequence of the postponement of product steps due to the COVID-19 pandemic, there is slightly more room because passenger growth has slowed down and if the (timing of the) product steps is jeopardised, we aim for timely clarity/communication in order to focus on the impact determination and thus manage expectations with stakeholders. This is offset by budget pressures on infrastructure investments and activity (maintenance) delays, which can lead to infrastructure bottlenecks with an impact on our services. Pressure remains on Greater Amsterdam, especially due to the dependency between different projects and the many activities.
• The Medium Term process together with ProRail has been improved and promotes transparency in decision making.
On balance, the risk has remained the same. Measures are in place to increase control, but threats including cyber risks (including on the train) are now increasing as the threat landscape continues to grow.
• The most important critical systems in train logistics control were replaced in 2019 and 2020, and the major remaining operational legacy systems, including travel information system and Data Warehouse systems, will largely be replaced during the period to 2022. Business continuity agreements with suppliers have been tightened.
We kept the Netherlands moving during the COVID-19 pandemic and adapted to the new circumstances, proving to be agile and flexible. The financial situation and downward traveller projections demand that we work structurally to make NS smaller and more agile.
• Supported by a Transformation Team, NS is working in a structured manner on cost savings and behavioural change so that we can work together more decisively and respond more quickly to changes. We also promote advancement and retraining so that people remain employable and flexible in the changing context.
10. COVID-19 crisis:
This risk is new in 2020. The increasing absence of direct staff at NS or ProRail leads to pressure on the implementation of timetables. NS is compelled, with coordination throughout public transport, to respond quickly to government measures.
• Based on an evaluation of the first wave, governance was tightened and lessons were learned for possible new waves and government actions. Monitoring of staff availability takes place through regular channels that are adapted accordingly. Several variants for the possible scaling down of timetables due to occasional staff shortages have been prepared.