Scoring Methodology · v1
Methodology

How the supply chain risk score works

The interactive risk dashboard is a transparent model, not a black box. Every figure is derived from a defined method, grounded in established supply chain risk practice. This one-pager sets out how each number is produced.

1 · Risk taxonomy & Value-at-Risk

Risk is grouped into six categories tuned to a renewable energy supply chain: geopolitical, climate-physical, social / human-rights, economic / financial, operational / single-source, and regulatory / compliance. Each carries a baseline likelihood and a monetary impact (€M).

Value-at-Risk (95%) is estimated with a 3,000-run Monte Carlo simulation: in each run a category incurs a loss drawn from a normal distribution around its impact if a random draw falls below its likelihood; losses are summed. The 95th percentile is the VaR, the mean of the tail beyond it is the CVaR, and the mean is the expected annual loss.

2 · Resilience index

A weighted mean (0–100) of six factors — diversification, inventory buffers, dual-sourcing, visibility, financial strength and agility. The index dampens category impacts, so strengthening resilience visibly lowers Value-at-Risk.

3 · Supplier scoring & KRIs

Each supplier is scored 0–100 across five key risk indicators, combined with the weights below into a composite score.

Geographic25%
Financial20%
ESG20%
Concentration20%
Delivery15%

Composite scores map to four tiers:

Low < 25 Medium < 50 High < 75 Critical ≥ 75

4 · Composite risk score

The headline score (0–100) blends three signals: Value-at-Risk (40%), average supplier risk (35%) and the inverse of the resilience index (25%). It maps to the same four tiers as suppliers.

5 · Scenario & stress testing

Toggles (geopolitical shock, key-supplier disruption, climate event, regulatory tightening) and sliders (commodity price, demand, diversification effort) adjust the model's likelihoods, impacts, supplier indicators and resilience factors. When a disruption scenario is active, the displayed VaR applies a stress-cascade multiplier of ×1.68 — late-delivery penalties (0.15), inventory (0.08), expediting (0.20) and customer attrition (0.25).

6 · Regulatory & compliance

Gap scores (0 = compliant, 100 = full exposure) for CSRD, CS3D, the EU Critical Raw Materials Act, conflict-minerals / forced-labour and trade sanctions weight the regulatory risk category.

All figures in the interactive dashboard are illustrative, for a fictional sample company, chosen to give the model a meaningful range. The value is in the method — taxonomy → VaR → resilience → stress test — which mirrors established supply chain risk practice.
NordVind Energy Supply Chain Risk Assessment erlend.raabe@gmail.com