Skip to the content

Summary of Risk Types and Sources

How to Study the Different Risk Types

Adapted from Applying New Variables to Existing Supply Management Decisions (2022)



Risk Type


Measured by



Supply-Side Risks

Supply Dependence and Interdependence

• Measures the requirements of input factors based on direct requirements (from immediate suppliers) to create a unit of a product or service

Direct requirements, measured in U.S. Dollar, to create one unit (i.e., $1) of output; data provided by the Bureau of Economic Analysis

• The analysis of requirement tables helps understand the dependence on products (commodities, semi-finished products) and services without analyzing a specific supply chain

Geographical Supply Concentration

• Amount of goods imported from different countries


Value of imports by product category per country

• Allows the identification of alternative countries to import goods

• Allows understanding of the supply dependence on specific countries/regions

Financial Stress in Supply Chains

• Enables firms to assess the financial health of suppliers and predict the likelihood of bankruptcy

• Based on a simple score that allows easy interpretation

Altman’s Z score

• Analysis of the likelihood that suppliers suffer from financial difficulties and the risk of bankruptcy

Socio-Political Risk

• The HDI (human development index) is a measure of average achievement in key dimensions of human development, i.e., long and healthy life, the standard of living

Human Development Index (HDI)

• Analysis of political and social risks in upstream and downstream markets, including the risk of corruption, level of education, etc.

• Helps to assess social stability of markets

Policy Uncertainty (stability)

• To measure policy-related economic uncertainty, consisting of three components: (1) newspaper coverage of economic-policy uncertainty, (2) Congressional Budget Office (CBO) reports on federal tax code provisions, and (3) Federal Reserve Bank’s survey of professional forecasters

Various Economic Policy Uncertainty Indices

• Analysis of economic policy risks

• Allows assessment of the stability of economic policy in markets

Commodity Price Fluctuation and Price Uncertainty

• Tracks the level of price increases and price variances (uncertainty) of commodities

Price changes, price variance

• Analysis of historic price variance of commodities to understand vulnerabilities to external shocks

Transaction Risk – Logistics Risks (upstream and downstream)

Logistics Capabilities

• The Logistics Performance Index (LPI) measures the capability of a country’s logistics systems, measured by (1) Efficiency of customs clearance process, (2) Quality of infrastructure, (3) Ease of arranging competitive shipments, (4) Quality of logistics services, (5) Tracking ability, (6) Timeliness of shipments

Logistics Performance Index (LPI)

• Analysis of overall logistics capabilities in various markets

Logistic Price Uncertainty in the Trucking Market

• Cass Freight Index: Indicator of market fluctuations in per-mile dry van truckload pricing in the U.S.

• Data is derived from actual freight invoices and is a mix of contract and spot rates

Cass Freight Index


• Analysis of logistics costs and logistics costs variability in the trucking industry

Logistics Price Uncertainty in the Ocean Carrier Market

 • The HARPEX Freight Index reflects the worldwide price development in the charter market for container ships

HARPEX Freight Index

Baltic Dry Index 

• Analysis of logistics costs and logistics costs variability in the ocean carrier market

Logistics Interdependence

• Characterizes how well two (bilateral) countries are connected via maritime transport networks

• Enables firms to assess if different logistics options exist between two countries

Liner Shipping Bilateral Connectivity Index (annual)

• Analysis of interconnectivity of markets; indicative of how easily shippers and consignees can identify alternative shipping routes

Market Access (supply chain barriers)

• Describes the level of trade barriers, such as tariffs

Import Tariff Rates on non-agricultural and non-fuel products (annual)


• Analysis of market barriers that increase the cost of imports or exports

Warehouse Prices

• The Logistics Managers’ Index (LMI) tracks different dimensions relevant to the U.S. logistics activity 

Logistics Manager Index (LMI)

• Index to study logistics activity in the U.S. market, including capacity, utilization, and cost of warehousing, transportation, and inventory

Demand-Side Risks

Demand Dependence and Interdependence

• Describes what industries consume what product/product categories

• Helps to investigate the direct (tier-1) and indirect (beyond tier-1) dependencies on certain industries

Demand Concentration – use export tables

• Analysis of downstream dependence on markets and countries

Demand Concentration

• Describes concentration of demand based on countries and regions

Export tables

• Analysis of which countries/regions a product is exported to

Risk Tool

Assess Costs Everywhere (ACE) Tool


The U.S. Department of Commerce has developed a database with information about various types of costs involved with sourcing from foreign countries and from the U.S., including labor, travel and oversight, shipping, inventory carrying, and trade financing costs. The database also provides information about different types of risks involved with sourcing, such as product quality, energy and real estate, intellectual property, regulatory compliance, and political and security risks.

U.S. Department of Commerce at