How do you calculate a supply chain risk score?

Multiply the severity, occurrence, and detection scores together. With severity 6, occurrence 4, and detection 3 on the inputs, the model returns a risk score of about 4.55 on its normalized scale.

What is severity, occurrence, and detection?

Severity is how damaging the disruption would be, occurrence is how often it's likely to happen, and detection is how hard it is to catch beforehand — a high detection score means the risk is easy to miss. Multiplying them gives the priority number.

What is a good supply chain risk score?

Lower is better. There is no universal threshold, but you set an internal cutoff and treat everything above it as requiring a mitigation plan; the value here of 4.55 should be read against your own ranked list, not in isolation.

Why multiply the scores instead of adding them?

Multiplying makes the number explode when all three factors are high, which is exactly the combination you most want to surface — a severe, frequent, hard-to-detect risk. Adding would let one low factor mask two dangerous ones.

How is this different from a generic FMEA RPN?

The math mirrors FMEA's risk priority number, but the lens is supply chain — severity captures revenue or production impact, occurrence captures supplier or geopolitical likelihood, and detection captures whether your monitoring would flag it in time.

Can I compare scores across different suppliers?

Only if you rate every supplier on the exact same scoring scale with the same anchor definitions. Inconsistent rating discipline is the fastest way to make the comparison meaningless, so calibrate your team on what each score level means first.

Reshoring & Tariff Strategy calculator

Risk Adjusted Supply Chain Cost Calculator

Risk-adjusted supply chain cost is an FMEA-style risk priority score that combines how severe a supply disruption would be, how likely it is to occur, and how hard it is to detect before it hits. Supply chain managers, sourcing teams, and continuity planners use it to rank dozens of competing risks — a single-source supplier, a tariff exposure, a long-lead component — on one comparable scale. It matters because risk attention and budget are finite, and gut feel tends to over-weight dramatic-but-rare events while ignoring quiet, undetectable ones. Reducing each risk to a single number forces an apples-to-apples prioritization of where to invest in dual sourcing, buffer stock, or monitoring.

What this calculator does

Estimate risk adjusted supply chain cost for reshoring and tariff strategy using production-ready inputs so teams can rank risks and decide which issue needs containment, controls, or escalation first.
Use it when risk adjusted supply chain cost in reshoring and tariff strategy needs a defensible ranking against other reshoring and tariff strategy risks for the next review.
It multiplies a severity score, an occurrence score, and a detection score to produce a single risk priority number for a supply chain risk.

Formula used

Risk adjusted supply chain cost risk score = risk adjusted supply chain cost severity score × risk adjusted supply chain cost occurrence score × risk adjusted supply chain cost detection score
Use the same scoring scale across comparable risk adjusted supply chain cost risks.

Inputs explained

Risk adjusted supply chain cost severity score: Score the impact using the same FMEA, quality, safety, delivery, or business-risk scale used by the team.
Risk adjusted supply chain cost occurrence score: Score how often the issue appears using defect history, field data, maintenance records, or supplier performance.
Risk adjusted supply chain cost detection score: Score how likely current controls are to catch the issue before shipment, use, or customer impact.

How to use the result

Use it when triaging a portfolio of supplier or sourcing risks, building a continuity plan, or deciding which exposures justify dual-sourcing or buffer investment first.
The scores are subjective ordinal ratings, so the product is only meaningful when the same scale and rating discipline are applied consistently across every risk being compared.

Current U.S. benchmarks

Sourcing currencies as of 2026-07-02 (Federal Reserve H.10): 6.7886 CNY and 17.4524 MXN per USD. Landed-cost comparisons move with these daily rates.
U.S. iron and steel imports ran $2.1B in May 2026 (Census International Trade). The U.S. ran a trade deficit of $0.4B in the category that month. Import volumes are the pressure gauge behind tariff and reshoring decisions.

Common questions

How do you calculate a supply chain risk score? Multiply the severity, occurrence, and detection scores together. With severity 6, occurrence 4, and detection 3 on the inputs, the model returns a risk score of about 4.55 on its normalized scale.
What is severity, occurrence, and detection? Severity is how damaging the disruption would be, occurrence is how often it's likely to happen, and detection is how hard it is to catch beforehand — a high detection score means the risk is easy to miss. Multiplying them gives the priority number.
What is a good supply chain risk score? Lower is better. There is no universal threshold, but you set an internal cutoff and treat everything above it as requiring a mitigation plan; the value here of 4.55 should be read against your own ranked list, not in isolation.
Why multiply the scores instead of adding them? Multiplying makes the number explode when all three factors are high, which is exactly the combination you most want to surface — a severe, frequent, hard-to-detect risk. Adding would let one low factor mask two dangerous ones.
How is this different from a generic FMEA RPN? The math mirrors FMEA's risk priority number, but the lens is supply chain — severity captures revenue or production impact, occurrence captures supplier or geopolitical likelihood, and detection captures whether your monitoring would flag it in time.

Last reviewed 2026-05-12.