Procurement Glossary
Bow-tie analysis: Systematic risk analysis for Procurement
November 19, 2025
Bow-tie analysis is a structured method of risk analysis that systematically visualizes the causes and effects of risks. In Procurement , it enables a comprehensive view of supplier risks and their controls. Find out below what bow-tie analysis is, how it is used and what advantages it offers for risk management.
Key Facts
- Visualizes risks in the form of a loop with central event, causes and effects
- Combines fault tree analysis (left) with event tree analysis (right)
- Systematically identifies preventive and reactive control measures
- Particularly suitable for complex supplier risks and procurement processes
- Supports the development of targeted risk mitigation strategies
Contents
Definition: Bow-tie analysis
Bow-tie analysis is a graphical risk assessment method that links a key risk event with its causes and consequences.
Basic structure and components
The bow-tie diagram consists of three main elements: the central event (top event), the causes on the left-hand side and the effects on the right-hand side. The shape is reminiscent of a bow tie, hence the name.
- Left side: Fault tree analysis with root causes and barriers
- Center: Critical event or risk scenario
- Right side: Event tree analysis with possible consequences
- Control measures: Preventive and reactive barriers
Bow-tie analysis vs. traditional risk analysis
In contrast to one-dimensional approaches, bow-tie analysis takes a holistic view of risks. It combines root cause analysis with impact assessment and makes risk matrix evaluations more transparent.
Importance of bow-tie analysis in Procurement
For purchasing organizations, the method offers a structured approach to complex procurement risks. It supports the assessment of supplier default risks and the development of targeted control strategies.
Methods and procedure for bow-tie analyses
The systematic implementation of a bow-tie analysis is carried out in structured phases with defined work steps.
Preparation and team composition
An interdisciplinary team of Procurement, risk management and technical experts jointly develop the bow-tie diagram. The collaboration of different perspectives ensures a comprehensive risk assessment.
- Definition of the key risk event
- Selection of relevant stakeholders and experts
- Definition of the scope of analysis and objectives
Root cause analysis and barrier identification
The left-hand side of the diagram systematically records all possible causes of the risk event. Existing preventive control measures and their effectiveness are also evaluated. Early warning indicators play an important role in identifying causes.
Impact analysis and response planning
The right-hand side visualizes possible consequences of the risk event and defines reactive measures. This analysis supports the development of contingency plans and continuity strategies for critical procurement processes.
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Important KPIs for bow-tie analyses
The effectiveness of bow-tie analyses can be measured and continuously improved using specific key figures.
Barrier effectiveness and control maturity
These key figures evaluate the effectiveness of identified control measures. They measure how well preventive and reactive barriers actually reduce the risk or limit its impact.
- Number of effective vs. ineffective control measures
- Average response time for barrier failure
- Cost-benefit ratio of implemented controls
Risk reduction and event frequency
These metrics show the practical impact of the bow-tie analysis on the risk landscape. They document improvements in risk mitigation and support the evaluation of risk mitigation plans.
Analysis process and team performance
Process KPIs evaluate the efficiency of the analysis itself. They measure the time required, the completeness of risk identification and the quality of team collaboration when creating diagrams.
Risk factors and controls for bow-tie analyses
When using Bow-Tie analysis, various challenges can arise that affect the quality of the results.
Complexity and excessive demands
Extensive bow-tie diagrams can become confusing and overwhelm users. Too detailed an analysis may lead to paralysis instead of action-oriented insights.
- Focus on key risk factors
- Structured moderation of the analysis sessions
- Regular simplification of complex diagrams
Subjectivity and distortions
The quality of the analysis depends heavily on the expertise and objectivity of the people involved. Cognitive biases can lead to incomplete or incorrect risk assessments. Risk registers help with systematic documentation.
Dynamics and topicality
Risks change continuously, while bow-tie diagrams represent static snapshots. Without regular updates, the analyses quickly lose their relevance for operational decisions in emergency management.
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Practical example
An automotive manufacturer uses bow-tie analysis for critical semiconductor suppliers. The central event "delivery failure of microchips" is linked to causes such as geopolitical tensions, natural disasters and capacity bottlenecks. On the right-hand side, effects such as production stops, loss of sales and customer dissatisfaction are analyzed. The team identifies preventive measures such as dual sourcing and reactive controls such as emergency stocks.
- Systematic recording of all risk factors in semiconductor procurement
- Development of targeted control strategies for each risk level
- Improving supply chain resilience through structured planning
Trends & developments in bow-tie analysis
Bow-tie analysis is constantly evolving and integrating new technologies and expanded areas of application.
Digitization and software integration
Modern software tools enable the automated creation and updating of bow-tie diagrams. This integration facilitates collaboration between teams and improves the documentation of risk assessments.
- Cloud-based collaboration platforms
- Automatic data integration from ERP systems
- Real-time monitoring of risk indicators
AI-supported risk analysis
Artificial intelligence adds predictive components to bow-tie analysis. Machine learning algorithms identify patterns in historical data and forecast potential risk developments. This supports proactive supply risk management strategies.
Integration in supply chain resilience
The method is increasingly being used to assess complex supply chain risks. It shows its strengths particularly in the analysis of Tier N transparency and multi-level supplier relationships.
Conclusion
Bow-tie analysis offers purchasing organizations a structured method for holistic risk assessment. It combines root cause analysis with impact assessment and makes control measures transparent. Through the systematic visualization of complex risk relationships, it supports well-founded decisions in procurement risk management. Continuous further development through digital tools and AI integration strengthens its relevance for modern supply chains.
FAQ
What distinguishes bow-tie analysis from other risk methods?
Bow-tie analysis combines cause and effect analysis in a single diagram. It visualizes both preventive and reactive control measures and thus offers a holistic view of risks that goes beyond traditional risk matrices.
How time-consuming is it to carry out a Bow-Tie analysis?
The time required varies depending on the complexity of the risk being analyzed. Simple analyses require 2-4 hours, while comprehensive assessments of critical supplier risks can take several workshops over several weeks. The investment pays off through structured risk transparency.
Which risks are particularly suitable for bow-tie analyses?
Complex risks with multiple causes and effects, such as supplier defaults, cyber risks or compliance violations, are particularly suitable. The method shows its strengths when it comes to risks that affect different areas of the company and require coordinated control measures.
How often should bow-tie diagrams be updated?
The update frequency depends on the risk dynamics. Critical supplier risks should be reviewed quarterly, while stable process risks require annual updates. Significant changes in the supply chain or new threats require immediate adjustments to the analysis.
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