EERI Methodology

The European Energy Risk Index (EERI) is a proprietary TTF-centered composite index that measures European gas-market stress and the structured energy-risk events that may intensify it. It answers one critical question:

EERI is the first regional index in the EnergyRiskIQ platform, built on top of the Regional Escalation Risk Index (RERI) framework. Where GERI provides a global risk temperature, EERI zooms into Europe specifically — the region most acutely sensitive to gas supply disruption, pipeline dependency, and geopolitical spillover from neighbouring conflict zones.

EERI is designed for energy traders, gas desk analysts, LNG procurement teams, European utility risk managers, freight planners, and institutional investors with European energy exposure. It translates complex, multi-source intelligence into an actionable daily signal that sits between raw news and formal market analysis.

Scoring Range

EERI produces a daily value on a 0 to 100 scale. A value of 0 represents a theoretical state of zero energy disruption risk for Europe, while 100 represents a theoretical state of maximum systemic energy crisis. In v2, each component is normalised against a fixed, documented cap. This keeps an identical set of conditions comparable through time and prevents a changing historical window from making the index more sensitive during quiet periods.

Risk Bands

Each daily EERI value maps to one of five risk bands:

Risk Band	Range	Interpretation
LOW	0 – 20	European energy environment is calm. No significant geopolitical or supply disruption signals are active. Standard operations can proceed without elevated monitoring.
MODERATE	21 – 40	Background risk is present. Some supply concerns, regional tensions, or policy uncertainties exist, but systemic disruption is not indicated. Routine monitoring is appropriate.
ELEVATED	41 – 60	Meaningful risk accumulation detected across European energy markets. Multiple stress vectors are contributing simultaneously. Active monitoring and hedging consideration are warranted.
SEVERE	61 – 80	Significant systemic stress affecting European energy security. Risk signals are converging across supply, transit, and market channels. Active hedging and contingency planning are strongly advised.
CRITICAL	81 – 100	Critical systemic stress. Risk signals have converged across all major channels. Historical precedent indicates imminent or active market disruption. Defensive positioning and emergency protocols are strongly indicated.

Trend Indicators

Each daily EERI reading includes two trend signals:

• 1-Day Trend — Change from the previous day's value, showing immediate momentum
• 7-Day Trend — Change from seven days prior, showing directional trajectory

These trends are essential for distinguishing between an EERI of 70 that is rising sharply (escalation phase) and an EERI of 70 that is falling from a recent peak (stabilisation phase). The same number carries very different operational implications depending on its trajectory.

EERI v3 assigns 80 points to Dutch TTF market intelligence, up to 15 points to eligible alert_events, and five points as a valid-market observation floor. Within the market block, unavailable higher-history components are omitted and their weight is redistributed proportionally among available TTF components; missing inputs are never inserted as zero.

Regional Focus

EERI v2 accepts only events carrying a recognised canonical regional tag. Europe aliases are matched as complete normalised labels—for example, Europe, EU, European, Western Europe, or Eastern Europe—not as free-text substrings. This prevents unrelated words containing short sequences such as “eu” from being misclassified as European events.

Event Eligibility and Quality Controls

An event contributes only when all of the following are true:

• Its alert type is one of the supported structured types
• Severity is valid on the 1–5 scale
• Confidence is present, finite, and at least 0.50
• Its region resolves to an exact supported regional alias

Duplicate or syndicated copies are identified conservatively from alert type, canonical region, normalised event title, and associated assets. Only the newest qualifying copy contributes. Missing severity or confidence is no longer replaced with a material default score.

Dutch TTF Market Data

The market core reads daily Dutch TTF observations from ttf_gas_snapshots in EUR/MWh. Each score records the TTF source date and capture timestamp. Return and trend components use prior observed sessions rather than calendar subtraction. When no new TTF observation exists, the last valid v3 score is carried unchanged and marked as a closed-market carry-forward; stale TTF is never combined with a fresh alert overlay.

Alert Types

EERI consumes three categories of structured alerts from the EnergyRiskIQ intelligence pipeline:

• High-Impact Events — Individual events with significant severity representing direct geopolitical or energy shocks (military escalations, infrastructure incidents, sanctions, policy shifts)
• Regional Risk Spikes — Synthesised alerts generated when a region's aggregate risk level rises meaningfully above its recent baseline, indicating clustering or escalation
• Asset Risk Alerts — Asset-specific alerts triggered when individual energy commodities or infrastructure show stress linked to European risk events

Event Categories

Eligible events are classified into thematic categories that determine their influence within the regional backbone. Theme Pressure itself is narrower and accepts only energy-relevant high-impact categories.

Category	Disruption Profile
War / Military / Conflict	Highest disruption potential — direct physical threat to energy infrastructure, supply routes, or producing regions
Supply Disruption	High disruption potential — production outages, pipeline stoppages, facility shutdowns, force majeure events
Energy	Significant — broad energy market developments with pricing or supply implications
Sanctions	Significant — trade restrictions affecting energy flows, often with delayed but persistent effects
Political	Moderate — government decisions, elections, or policy changes affecting energy policy
Diplomacy	Lower immediate impact — negotiations, agreements, or de-escalation signals that may reduce future risk

EERI v3 divides each raw TTF and alert component by a fixed cap and clamps the result to the 0–1 range. Fixed caps preserve comparability, prevent quiet rolling windows from magnifying routine changes, and make the scoring function reproducible.

Component	Fixed Cap / Range	Role
TTF Price Level	€15–€120/MWh	Primary European gas stress regime
TTF One-Session Upside Move	+25%	Immediate observed-session escalation
TTF Five-Session Upside Trend	+40%	Persistent short-term escalation
TTF Annualised Volatility	30%	Instability across up to 20 observed returns
Alert Events Overlay	15 points	Bounded structured-intelligence amplification

Formula Weights

Within the 85-weight market block, TTF Market = (65 × price level + 8 × one-session move + 8 × five-session trend + 4 × realised volatility) ÷ available weight. The final index is EERI = 5 + 80 × TTF Market + 15 × Alert Events Overlay, clamped to 0–100. The alert overlay is the v2 confidence-weighted event composite normalised to 0–1.

Four-Day Event Influence

Events do not disappear from the calculation at the next midnight. After eligibility and deduplication, their confidence-weighted influence follows a transparent decay schedule: 100% on the event date, 55% one day later, 30% two days later, and 15% three days later. A repeated copy of the same event does not restart or accumulate the signal; the newest qualifying copy wins.

Daily Computation

EERI is computed once per day, producing a single authoritative daily value. The computation runs after all alerts for the previous day have been finalised, ensuring complete data coverage. Daily computation is triggered automatically at 01:00 UTC.

Publication Tiers

EERI as a Regional Decision Layer

EERI is not a price forecast or trading signal. It is a regional risk context layer that tells professionals where European energy stress is concentrated and how it is evolving:

• EERI rising means European energy risk inputs are increasing — it does not guarantee energy prices will rise
• EERI falling means risk inputs are subsiding — it does not guarantee market calm
• EERI in CRITICAL means the concentration and severity of risk signals matches historical periods associated with significant energy market disruption

EERI and Dutch TTF Gas

Dutch TTF gas is EERI's primary market input and sole dashboard market series. TTF is Europe's primary wholesale gas benchmark; EERI augments its price regime with momentum, trend, volatility, and verified event intelligence.

Observed Pattern	Interpretation
EERI rising + TTF rising	Gas-market confirmation: risk conditions and the European benchmark are moving in the same direction
EERI rising + TTF stable/falling	Risk is not yet reflected in TTF, or the market judges it containable
EERI falling + TTF elevated	Risk inputs are easing while market pricing remains stressed or responds with a lag
EERI and TTF falling	Risk conditions and gas-market stress are easing together

Because TTF is a primary input, EERI is expected to maintain a positive relationship with the TTF price regime while differing from the raw price through momentum, volatility, and alert_events. This relationship does not make EERI a price forecast or trading instruction.

Regime Recognition

EERI's historical trajectory can be divided into recognisable risk regimes. Regime transitions are the most actionable signals in the index.

Regime	Characteristics	Typical Duration
Calm	LOW/MODERATE bands, stable trend, minimal driver activity	Weeks to months
Escalation	EERI rising, crossing MODERATE to ELEVATED, increasing driver count	Days to weeks
Crisis	SEVERE/CRITICAL bands, strong energy-theme pressure, high driver concentration	Days to weeks
De-escalation	EERI falling from CRITICAL/SEVERE, driver intensity decreasing	Days to weeks
Recovery	Returning to LOW/MODERATE as event influence and theme pressure decline	Weeks

EERI and GERI

GERI (Global Geo-Energy Risk Index) and EERI operate at different scales and serve different purposes:

Dimension	GERI	EERI
Scope	Global	European
Core Question	"Is the world dangerous?"	"Is Europe's energy security threatened?"
Audience	CIOs, strategists, allocators	Energy traders, gas desks, European risk managers
Decision Type	Strategic portfolio allocation	Tactical hedging and procurement
Sensitivity	Broad geopolitical environment	Europe-specific supply, transit, and market stress

Reading Them Together

• GERI high + EERI high: Global risk is concentrated in or affecting Europe. Maximum concern for European energy exposure.
• GERI high + EERI moderate: Global risk exists but Europe is buffered (strong storage, diversified supply, or risk concentrated elsewhere).
• GERI moderate + EERI high: Europe-specific risk (internal policy, localised disruption, or transit issues) that hasn't reached global systemic levels.

Future Regional Indices

EERI is the first implementation of the RERI framework. The same architecture is designed to support future regional indices for the Middle East and Black Sea / Caucasus corridor. When operational, these will activate the EERI Contagion pillar for cross-regional spillover measurement.

• EERI is not a gas price forecast. It measures the risk environment, not the price outcome.
• EERI is not a trading signal. It provides risk context for decision-making, not buy/sell instructions.
• EERI does not cover non-energy European risks. Banking crises, public health emergencies, or sovereign debt concerns are outside its scope unless they directly affect energy markets.
• EERI is not intraday. It is a daily index. Events occurring during the day will be reflected in the following day's computation.
• EERI does not measure European energy demand. It focuses on supply disruption risk and geopolitical stress, not seasonal consumption patterns or economic growth dynamics.
• EERI is not a substitute for market analysis. It is a complementary intelligence layer designed to sit alongside traditional energy trading and risk management tools.

Version Control

EERI operates under strict version control. The current model is v3 (eeri_ttf_v3), introduced on 8 September 2026. Stored observations are tagged with their model version to support auditability and reproducibility.

Feature Flag

EERI computation is controlled by a feature flag, allowing the index to be activated or deactivated without code changes. This ensures operational safety during maintenance or if data quality issues are detected.

v3 Governance Rules

• Stable normalisation: Fixed caps remain constant within the model version; they do not adapt silently to a rolling window
• Source-quality controls: Invalid, low-confidence, unrecognised-region, and duplicate alerts do not contribute
• TTF primacy: The TTF market block supplies 80 points; alert_events can add no more than 15
• Transparent persistence: Four-day event-confidence decay is part of the overlay; no hidden output smoothing is applied
• Closed-market integrity: Missing TTF sessions carry the last valid v3 score unchanged and are explicitly labelled
• Calendar-consistent trends: 1-day and 7-day changes use exact calendar dates rather than positional observations
• Formal upgrades: Any future change to weights, caps, eligibility, decay, or band boundaries requires a new documented model version

Independence and Objectivity

EERI is computed algorithmically from structured intelligence inputs. There is no editorial override, manual adjustment, or subjective intervention in the daily index value. The methodology is fixed for each model version, with changes implemented only through formal version upgrades.