*2.2. Prominent Risks and Their Impact*

The long-term operations of natural gas and electricity markets suffer from various risks, such as natural disasters (e.g., hurricanes, earthquakes, extreme weather, etc.), hazards of human origin (e.g., terrorist attacks, cyberattacks, operational errors, etc.) and technical deficiencies (e.g., design defects, pipeline failures, corrosion, aging equipment, etc.) [11]. To quantify their consequences, the most prominent risk factors were identified based on evidence from multiple sources. After an in-depth investigation into the relevant literature [37–40], surveys [41] and online accident reports, a list of the risk factors affecting each market was extracted. Interviews were conducted to obtain experts' opinions regarding the most salient risks or alternative risks associated with the two energy markets. Table 1 provides a summary of the most significant risk factors. These risk factors are dynamic in nature, and each has its own evolutionary pattern and impact on the SoS.



In this risk assessment of the natural gas market, our emphasis was on the four common factors identified above, which include pipeline defects, import shortages, extreme weather and geopolitical risks [8,35,41,42]. First, according to a survey in [41], pipeline defects such as corrosion account for 38.5% of cases of pipeline failure. They create a continuous disruption of the pipelines' normal operations. Second, international trade is one of the main sources of natural gas supply [8]. With the escalation of international conflicts or deliberate attacks, countries face the uncertainties of sharp declines in cross-border natural gas trade. Due to a high dependence on imports, the decline can barely be compensated by domestic production, resulting in a severe supply shortfall. Third, extreme weather such as freezing stimulates the consumption of natural gas for heating, and thus a seasonal peak may occur in natural gas demand [8,35]. As the most proportion of global natural gas is supplied by specific countries, the geopolitical risks also convey much pressure on the natural gas market. Severe gas-supply shortages induced by geopolitical issues have been observed in a worldwide scope, including in Europe, Asia, America, the Eastern Mediterranean region, etc. [42–44].

In the electricity market, the three primary risk factors triggering system failures were also extracted. First, damage to the power grid's infrastructure hinders the system from maintaining a stable electricity supply [45]. The malfunction of infrastructure such as substations and transmission lines results in inefficient electricity production and transmission. Second, as residents' and industries' demand for electricity fluctuates with time, temperature and location, demand peaks that surpass the normal supply of electricity may occur [45]. This overload will further expand the demand–supply imbalance [35]. Third, various hazardous events such as hurricanes, earthquakes and freezing may inflict significant harm on the power grid [46]. In terms of frequency and consequences, among these natural hazards, extreme weather is also considered to be one of the main risks, which induces a rise in electricity demand with excessively low temperatures. Based on our analysis, extreme weather induces a demand peak in both the natural gas market and the electricity market.
