Rail breaks and derailments can cause a huge loss to rail players due to loss of service, revenue, property or even life. Maintenance has huge impact on reliability and safety of railroads. It is important to identify factors behind rail degradation and their risks associated with rail breaks and derailments. Development of mathematical models is essential for prediction and prevention of risks due to rail and wheel set damages, rail breaks and derailments. This paper addresses identification of hazard modes, estimation of probability of those hazards under operating, curve and environmental condition, probability of detection of potential hazards before happening and severity of those hazards for informed strategic decisions. Emphasis is put on optimal maintenance and operational decisions. Real life data is used for illustration.