Risk-Adjusted Vendor Scoring

Standard scorecards evaluate what a vendor offers today. Risk-adjusted scoring evaluates the probability that what they offer today will still be available, supported, and competitively priced in 12-36 months. A startup with cutting-edge technology and a 12-month runway scores high on capability but carries existential vendor risk. A large enterprise vendor with stable pricing and a 10-year track record scores lower on innovation but carries minimal continuity risk. Risk-adjusted scoring captures both dimensions.

1. Assess Vendor Viability Evaluate financial health (funding, revenue, burn rate), market position (growing, stable, declining), customer concentration (how dependent are they on a few large customers?), and strategic direction (is this product core to their strategy or a side project?). Each factor contributes to a viability score that modifies the overall vendor score.
2. Evaluate Switching Cost If this vendor fails, what does migration cost? API-compatible vendors with open standards have low switching cost. Proprietary platforms with custom integrations and data lock-in have high switching cost. High switching cost amplifies the impact of vendor risk — you need higher viability confidence to justify higher lock-in.
3. Calculate Risk-Adjusted Score The risk-adjusted score = raw capability score multiplied by a viability factor (0.7-1.0). A viability factor of 1.0 means no material risk. A factor of 0.7 means significant viability concerns that discount the capability score by 30%. The discount reflects the expected cost of potential disruption.