Rail transport remains one of the most energy-efficient modes of transportation for both freight and passengers, with world demand continuing to rise with the ongoing global population surge. And though already widely recognized as the most sustainable form of mass transit, the rail industry must meet this growing demand with the ability to scale while maintaining a low environmental impact and meeting risk management requirements.
In this article, we’ll explore how Société nationale des chemins de fer français (SNCF), France's national state-owned railway company, rapidly adapted its risk management solution in partnership with Ventiv to support its evolving business and generate significant loss recoveries in the face of evolving opportunities and challenges.
A Diverse Transportation Risk Portfolio
Rail transportation continues to expand its pivotal role in the global economy, serving as a crucial mode of transportation resilient to various supply chain disruptions and negative world events. According to present trends, passenger and freight activity will more than double by 2050, and though the rail sector carries 8% of the world’s passengers and 7% of global freight transport, it represents only 2% of total transport energy demand. High-speed rail can therefore serve as an alternative to short-distance air travel, and conventional and freight rail can augment other modes of transport to provide efficient and expanded mobility.
Despite these opportunities, the rail transportation industry faces a myriad of risks ranging from operational and financial risks to safety and regulatory compliance, to name a few; on top of these factors, unforeseen events like geopolitical conflicts, natural disasters, equipment failures, and cyber-attacks are now part of the stark new operating landscape for rail enterprises. The complexities of managing risk also intensify with the expansion and digitization of rail networks, as well as other technological advancements poised to revolutionize the industry.
SNCF has had a long track record in the multifaceted landscape of risk management in the rail sector. As one of the world’s leading passenger transport and freight logistics services groups, SNCF transports over 15 million passengers every day throughout the world, makes more than 10 billion euros in investments per year, and employs over 275,000 staff members in France and around the world in 120 countries.
SNCF operates in six main sectors: mass transit, high-speed and conventional long-distance mobility, freight transport and logistics, network operation and maintenance, railway stations, and real estate. This diverse set of services and operational units also correspondingly present a myriad of risks that require an effective IRM strategy to help manage and prevent from turning into significant economic losses and safety hazards.
Integrated risk management (IRM) has emerged as a strategic approach for rail transportation enterprises to proactively identify, assess, and mitigate risks across their operations. For more than a decade, Ventiv has supported SNCF’s 3,000 users and complex risk management needs with a bespoke solution designed to evolve with emerging demands. The SNCF legal department manages its risk and insurance programs and has been instrumental in advising the direction of the solution in collaboration with Ventiv. SNCF has also developed an insurance policy for nearly 20 years designed to protect the company’s equity.
Compliance Challenges in Rail Transportation
Rail transportation is subject to a stringent regulatory environment, with safety standards and compliance requirements varying across regions. Adherence to these regulations is not only essential for legal compliance but also for maintaining public trust and ensuring the safety of passengers and cargo. An integrated approach to risk management delivered in an integrated risk management software enables enterprises to navigate this complex regulatory landscape efficiently.
For example, SNCF notified Ventiv of a required organizational restructuring in September 2019; due to French rail reform legislation taking effect at the start of the following year, the organization would be restructured into four joint stock subsidiaries of the SNCF holding company:
On the IRM solution side, Ventiv helped SNCF address these urgent operational changes by transforming its existing solution to align with the new requirements. In order to incorporate SNCF’s evolving structure, the Ventiv team had to reorganize the hierarchies within the application and modify the way various users see information in the system. For example, previous users now had different scopes of claims and only needed visibility into claims relevant to their company and role. Also, SNCF’s legal department was spun off as a separate entity, which required more restructuring within the application to facilitate new workflows and ensure ongoing compliance.
With the compliance deadline looming, Ventiv and SNCF moved promptly to modify the solution, as the new requirements impacted the scope of companies managed in the tool. The project was rapidly delivered and adopted widely across the new subsidiaries; post-launch, all companies were pleased with how the project was managed: on time and under budget.
To learn more about how Ventiv’s integrated risk management solution can help your organization's risk management efforts, contact Ventiv for a consultation today.
