RISK MANAGEMENT

As a responsible corporation, MTR seeks to identify and manage risks which may materially affect its business and by implication, the interests of our shareholders, customers and staff. Risk management is not analogous to sustainability but by likening risk management to sustainability, MTR gains greater insights into the creation of long-term shareholder value.

MTR has a four-stage approach for managing business risk .

Identification: By considering the three elements of sustainability (finance, people and environment), a long list of possible risks to the business is compiled. At this stage, the emphasis is on generating a wide range of risks (risk register) with no attempt to assess their importance.

Prioritization: Each of the identified risks is assessed in terms of severity of consequence and frequency of occurrence. The prioritization of risks is undertaken separately for the three elements of sustainability as their severities are not necessarily directly comparable. Risks with a high consequence - likelihood score are identified as priority business risks and are taken forward to the next stage for senior management attention. To ensure their status remains up-to-date, business risks are reviewed periodically and as events take place.

Action: For each priority risk, ownership is agreed and actions identified. Whilst risks are identified and prioritized by the Executive, actions are identified within the relevant Division(s).

Monitor & Report: The implementation and effectiveness of the actions are monitored on an ongoing basis using key performance indicators wherever possible. Senior management is informed of risk and action status through regular reporting and key results are presented in MTR's Annual Report and Corporate Sustainability Report.