Prewave’s detailed and dynamic scoring system enables businesses to proactively manage risks, make informed decisions, and maintain compliance with regulatory requirements. All scores displayed on the platform range from 1 to 100. The scoring sentiment always follows the same logic, with a score of 100 indicating “least risk detected” and a decreasing score representing an accumulation of risk indication.
The 360° Risk Score Development graph displays the trend of risk scores over the past two years, allowing for tracking improvements or deteriorations in risk management.
The Risk Matrix visualizes the action priority. The action priority is a value combining both risk score and impact . The latter is calculated using the following values:
- Degree of Influence:
Impact
0-1%
No
1-3%
Low
3-7%
Mid
7-20%
High
20-100%
Critical
- Causal Contribution, e.g.: As the sole purchaser of a product containing potentially hazardous ingredients, your company bears significant responsibility.
- Self-defined numerical value in the Data Tab of the supplier
- Corresponds to an increase in the Impact Value by +1
The action priority is a measure used to determine the intensity and urgency of actions required in response to the relationship with the supplier. Specifically:
- High/Critical Action Priority: Indicates that the relationship with the supplier is intensive enough to warrant the implementation of adequate preventive measures. This suggests that the success of taking such measures is likely, given the strength of the supplier relationship.
To understand the scoring of suppliers in Prewave, it is important to be familiar with Prewave Perspectives. These can be customized to meet specific requirements, but Prewave also offers standardized perspectives based on best practices:
The scoring always reflects a supplier’s risk in correlation with the selected perspective.
It is possible to create customised perspectives based on your needs. The event types and their weighting can be adjusted. Contact your Customer Success Manager or Customer Support for details.
Score Components:
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Score Type: |
Weighting: |
Description: |
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Peer score: |
30% |
15% Country risk |
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7,5% Industry risk |
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7,5% Commodity risk (if not available Industry Score weight increases to 15% and takes commodity risk share) |
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Alert score: |
40% |
40% Public Alert risk |
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0% Customer Alert Risk |
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Assessment score: |
20% |
The supplier can answer self-assessments to improve the score. It can however also impact the score in a bad way if the requirements of the questionnaire are not met. |
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External data score: |
10% |
This score component can be chosen by the customer. This is suggested if the customer already has additional information or certificates in place and can verify an improvement of some sort. The customer can add this score manually in the system or include it over API from other external plat-forms. |
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Tier-N score: |
0% |
Tier-N Industry risk |
Potential risks in the supplier's upstream value chain, specifically considering the country risks of commodity-producing nations, weighted by their share of global exports. It does not account for the actual tier-n structure of the supplier. By default, this score's weight is set to 0% but can be adjusted within the perspective. |
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Tier-N Commodity risk |
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Overall score: |
100% |
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In the initial phase of the ongoing project, all suppliers automatically receive an abstract risk analysis using our Peer Scoring method. The Peer Score represents the risk score of a supplier based on the associated peer groups available on Prewave, which include Country, Industry, and Commodity. This score is calculated as the average of the weights of these underlying peer groups. To comply with legislative requirements, the Country Peer Scoring is based on multiple NGO indices.
Subsequently, the identified group of essential suppliers is subjected to a concrete risk analysis using our Red Flag Screening method to validate the assumed risks. The Prewave AI scans suppliers for incidents found in digital media and documents them as Alerts. The Alert Score represents the overall quantity and severity of alerts generated for a target in the selected Prewave Perspective, calculated based on a weighted average of the underlying Category Scores.
- Category Scores differentiate between various aspects relevant to the selected Prewave Perspective.These scores are based on the underlying Event Type Scores within each respective category.
- E.g.: In the LkSG Perspective, these aspects include: Environment - Human Rights - Labor Rights - Health & Safety
- Event Type Scores are the most granular form of scores displayed in Prewave, with over 120 Event Types available. These scores reflect the quantity and severity of detected alerts within the past 24 months.
Several factors influence the detected severity of an alert:
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- Perspective: An alert can have varying impacts on the scoring based on the selected perspective.
- E.g.: A protest might be classified as high risk in the Disruption Perspective, but will have significantly less impact on the scoring in the Sustainability Perspective.
- People Scope: Number of people affected:
- Up to 10
- Up to 100
- 100s
- 1000s
- 10,000s
- Alert Status: Indicates the level of certainty and confirmation of an alert:
- Accusation / blame
- Announcement / broadcast
- Happens / occurs
- Investigation / inspection
- Negotiation / mediation
- Rumor / repute
- Terminates / stops
- Warning / threat
- Event Combination: Multiple Event Types could be detected from the same alert:
- E.g.: an environmental issue impacting human rights or health and safety
- Neutralization: Recent events are rated higher, with their weighting gradually decreasing over 24 months.
- Deduplication: If many events of the same type are detected in a short period, subsequent events of the same type are rated lower.
- Perspective: An alert can have varying impacts on the scoring based on the selected perspective.
The Overall Score (360° Risk Score) consolidates all available information, combining Peer Scores and Alert Scores. Additionally, if activated, the Self-Assessment Score and Scoring from external data sources can influence the 360° Risk Score.
This score encompasses both abstract and concrete risks providing a comprehensive and dynamic assessment of a supplier's risk profile. It is a constantly changing value influenced by various factors, calculated through a non-linear and weighted algorithm. The key factors included in the calculation are:
- Public Media Appearance: The frequency of news articles related to the supplier, measured by the number of articles created daily.
- Timestamp: The timing of the alert, considering how recent the event is.
- Criticality: The priority level assigned to the alert, reflecting its importance and potential impact.
- Recurrence: The frequency of similar events occurring in the past.
The scoring process is conducted within the specific group the event type belongs to. All event types within a group are calculated into the group score, and all group scores are aggregated into the overall score.
Negative scores outweigh positive scores, as more critical alerts significantly impact the overall risk assessment. However, the absence of alerts results in a perfect score of 100, which is also a part of the scoring mechanism. This weighted average approach ensures that critical risks are highlighted, making the score more sensitive to severe issues rather than being diluted by numerous minor positive events.
Why is the group score worse than the minimal event type score?
The score for the event group is lower than the score for the event types because the weighting of the alerts and the number of alerts are relevant. For example:
It is evident that alerts were found for the event types "Modern Slavery" and "Unethical Labor." Let's assume that for the event type "Unethical Labor," there were 5 alerts with a moderate weighting, and for "Modern Slavery," there were 10 alerts with a heavy weighting. This means that the scoring for the event type “Unethical Labor” (56) includes 5 alerts with a moderate weighting, and the scoring for “Modern Slavery” (53) includes the 10 with a heavy weighting. For the scoring of the event group "Human Rights," therefore, 15 alerts with both moderate and heavy weightings are considered, resulting in a score that is lower than the scores of the individual event types.
The reason for this is that otherwise, the scores of the other event types where nothing was found would automatically pull the overall score of Human Rights into the green range if the average were always used.