GERI Methodology

The Global Geo-Energy Risk Index (GERI) is a proprietary composite index that measures the overall level of geopolitical and energy supply risk affecting global energy markets on any given day. It distills a complex, multi-source intelligence pipeline into a single, interpretable daily value that answers one question:

GERI functions as a macro-level risk thermometer — analogous to the VIX for financial volatility, but purpose-built for geopolitical and energy risk. It is designed for macro traders, risk committees, asset allocators, strategists, and energy professionals who need a reliable, quantitative signal to inform portfolio decisions, hedging strategies, and risk exposure management.

In a world where pipeline politics, military escalations, sanctions regimes, and supply chain disruptions can move energy prices faster than fundamentals, GERI provides the structured risk context that sits between raw news and formal market analysis — enabling professionals to act on intelligence rather than react to headlines.

Scoring Range

GERI produces a daily integer value on a 0 to 100 scale. A value of 0 represents a theoretical state of zero geopolitical or energy risk, while 100 represents a theoretical state of maximum systemic crisis. The scale is calibrated so that moderate, everyday risk environments cluster in the 30–50 range, while sustained readings above 75 indicate historically unusual stress.

Risk Bands

Each daily GERI value maps to one of five risk bands, providing an immediate qualitative interpretation:

Risk Band	Range	Interpretation
LOW	0 – 20	Benign geopolitical environment. Energy supply risks are minimal. Markets are operating under normal conditions with no significant escalation signals.
MODERATE	21 – 40	Background risk is present but manageable. Some regional tensions or supply concerns exist, but systemic contagion is not indicated. Standard monitoring posture.
ELEVATED	41 – 60	Meaningful risk accumulation detected. Multiple regions or risk vectors are contributing to a heightened threat environment. Active monitoring and hedging consideration warranted.
SEVERE	61 – 80	Severe disruption pressure across multiple regions. Risk signals are converging with high probability of market dislocation. Active hedging and contingency planning strongly advised.
CRITICAL	81 – 100	Critical systemic stress. Risk signals have converged across regions and asset classes. Historical precedent indicates imminent or active market disruption and supply chain compromise. Defensive positioning and emergency protocols indicated.

Trend Indicators

Each daily GERI reading is accompanied by two trend signals:

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

These trends provide critical context: a GERI value of 60 that has risen 15 points in a week carries a very different implication than a GERI of 60 that has fallen 10 points over the same period. The same number tells a very different story depending on its trajectory.

GERI is constructed from four distinct risk pillars, each capturing a different dimension of the global risk landscape. This multi-pillar architecture ensures the index is not dominated by any single event type and provides a balanced view of systemic conditions.

Philosophy

Not all geopolitical events carry equal weight for global energy markets. A military escalation in the Strait of Hormuz has fundamentally different implications for energy pricing than an equivalent escalation in a region with no energy infrastructure. The Regional Weighting Model ensures that GERI reflects this reality by applying pre-aggregation multipliers based on the region-cluster from which the event originates.

Region Clusters

GERI groups the world into seven region clusters, each reflecting its structural importance to global energy markets:

Region Cluster	Rationale
Middle East	Controls approximately 30%% of global oil production, key chokepoints (Strait of Hormuz), and is the primary source of swing production capacity. Geopolitical instability here directly impacts global crude benchmarks.
Russia / Black Sea	Major global oil and gas exporter, critical pipeline infrastructure to Europe, historically the single largest source of European gas supply. Sanctions, conflicts, and transit disruptions have outsized effects on European energy security.
China	The world's largest energy importer and a decisive demand-side force. Chinese economic activity, stockpiling behaviour, and trade policy directly influence LNG, crude oil, and commodity pricing globally.
United States	The world's largest oil and gas producer, a major LNG exporter, and the issuer of most energy-relevant sanctions. US policy, production shifts, and strategic reserve actions have global pricing implications.
Europe Internal	A major consuming region with limited domestic production. European regulatory decisions, storage policy, and demand patterns affect TTF gas pricing and broader energy security dynamics.
LNG Exporters	A dedicated cluster for Qatar, Australia, and Norway — the three largest LNG exporters outside the US. Disruptions to any major LNG export facility can rapidly tighten global gas markets.
Emerging Supply Regions	Covers North Africa, South America, and other developing energy supply regions. While individually less influential, emerging supply disruptions can exacerbate tight market conditions during periods of elevated stress.

Classification Logic

Events are classified into region clusters through a hierarchical process. Keyword overrides ensure that events mentioning specific entities (e.g., Gazprom, Nord Stream, Kremlin for Russia; Qatar, Gorgon, Hammerfest for LNG Exporters) are classified correctly regardless of their generic geographic tagging. Events not caught by keyword overrides are mapped to their cluster based on their tagged region. Global or unattributed events receive a neutral weight, ensuring they contribute to the index without distortion.

Scale Preservation

The regional multipliers are scaled so that their average equals 1.0. This means the Regional Weighting Model reshapes the distribution of risk across regions without inflating or deflating the overall index level. A period with identical events occurring in every region simultaneously would produce the same GERI as a model without regional weighting.

Source Philosophy

GERI's signal quality depends directly on the quality, credibility, and diversity of its intelligence sources. The platform follows a strict curation philosophy: institutional sources first, trade and industry sources second, regional sources third — and no noise sources. General news aggregators, opinion blogs, social media, and financial spam feeds are excluded by design.

Source Credibility Tiers

Each source is assigned a credibility tier that influences its contribution weight:

Tier	Description	Examples
Tier 0	Primary institutional data	EIA, OPEC, government agencies
Tier 1	Professional market intelligence	Reuters, ICIS, Platts
Tier 2	Specialist trade publications	FreightWaves, Rigzone, Maritime Executive
Tier 3	Quality regional/general sources	Al Jazeera, Xinhua, EU Commission

Signal Domain Balance

The source portfolio is designed to cover six core signal domains, ensuring comprehensive coverage of all forces that influence energy risk:

Signal Domain	What It Captures
Supply	Production disruptions, capacity changes, reserves
Transit	Shipping routes, pipeline flows, chokepoint security
Geopolitics	Military conflicts, sanctions, diplomatic escalations
Demand	Consumption shifts, economic indicators, stockpiling
Policy	Regulatory changes, trade restrictions, energy policy
Infrastructure	Facility construction, maintenance, technical failures

Ingestion

Events are ingested continuously from curated RSS feeds across the source portfolio. Each event undergoes:

• Deduplication — Identical or near-identical events from multiple sources are consolidated
• Classification — Events are categorised by type (geopolitical, energy, supply chain, market, environmental) using keyword-based classification
• Region Tagging — Events are assigned to geographic regions based on content analysis

Custom Algorithm Enrichment

Classified events are enriched using custom algorithms to produce structured intelligence:

• Impact Assessment — Structured evaluation of the event's potential effect on energy markets
• Severity Scoring — Quantitative severity assignment on a standardised scale
• Asset Linkage — Identification of specific energy assets, commodities, or infrastructure affected
• Contextual Summary — Concise narrative explaining why the event matters for energy risk

Alert Generation

Enriched events that meet minimum severity and relevance thresholds are converted into structured alerts that feed directly into the GERI computation engine. Three alert types are generated:

• HIGH_IMPACT_EVENT — Individual events with significant severity representing direct geopolitical or energy shocks
• REGIONAL_RISK_SPIKE — Regional risk accumulation alerts triggered when a region's aggregate score exceeds its recent baseline
• ASSET_RISK_ALERT — Asset-specific alerts triggered when individual infrastructure or commodity risk exceeds thresholds

Daily Computation

GERI is computed once per day, producing a single authoritative daily value. The computation window considers alerts generated within the trailing 24-hour period, ensuring the index reflects the most current intelligence.

Publication Schedule

Historical Baseline

The index maintains a rolling historical baseline for normalisation purposes. This baseline tracks the minimum and maximum observed values for each pillar over a rolling window, ensuring that the 0–100 scale remains calibrated to the range of conditions actually observed in the data. This prevents the index from clustering at one end of the scale during prolonged periods of high or low risk.

GERI as Risk Thermometer

GERI is not an asset price prediction tool. It is a risk context layer that answers: "What is the current state of the geopolitical and energy risk environment?" The distinction is critical:

• GERI rising means risk inputs are increasing — it does not guarantee asset prices will move in any specific direction
• GERI falling means risk inputs are subsiding — it does not guarantee market calm
• The relationship between GERI and asset prices is mediated by market positioning, liquidity, storage buffers, and participant expectations

Cross-Asset Context

GERI is designed to be read alongside energy market data for maximum insight:

Cross-Reference	What It Reveals
GERI vs Brent Crude	Whether supply disruption fear is priced into oil markets
GERI vs TTF Gas	European vulnerability to geopolitical gas risk
GERI vs VIX	Whether energy/geopolitical risk is spilling into broader financial markets
GERI vs EUR/USD	European macro vulnerability to energy shocks
GERI vs EU Gas Storage	Whether Europe's physical buffer is adequate for the current risk level

Regime Recognition

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

Regime	Characteristics
Risk Accumulation	GERI rising gradually, assets react slowly. Risk is building but markets are discounting. Early warning phase.
Shock	GERI spikes sharply, assets overshoot. A high-impact event has materialised. Maximum volatility phase.
Stabilisation	GERI begins to fall, but assets remain volatile. Markets are repricing and uncertainty is still elevated.
Recovery	GERI returns to low/moderate bands, assets normalise. Risk has dissipated and markets have found equilibrium.

For transparency and proper use, it is important to understand the boundaries of the index:

• GERI is not a trading signal. It is a risk context layer, not a buy/sell indicator.
• GERI does not predict asset prices. It measures risk inputs, not market outcomes.
• GERI does not cover all risk types. It focuses on geopolitical and energy supply risk. It does not measure financial systemic risk, credit risk, or natural disaster risk except insofar as they affect energy markets.
• GERI is not real-time intraday. It is a daily index. Intraday events will be reflected in the following day's computation.
• GERI is not a substitute for fundamental analysis. It is a complementary intelligence layer designed to sit alongside traditional energy market analysis.

Version Control

GERI operates under strict version control. The current production model is v1.1, which introduced the Regional Weighting Model. All historical data is tagged with its computation model version, ensuring full reproducibility and auditability.

Planned Enhancements

• Source Weighting Calibration — An adaptive system that will calibrate individual source weights based on measured contribution to predictive power, uniqueness, timeliness, and false-positive control
• Semantic Deduplication — Moving beyond title-based deduplication to custom algorithm semantic clustering, reducing noise from multiple sources reporting the same underlying event
• Temporal Event Detection — Distinguishing between developing events and resolved events, preventing stale intelligence from inflating the index

Independence and Objectivity

GERI 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, and changes are implemented only through formal version upgrades with documented rationale.