The Colorado River Basin (CRB) is a critical resource for the American Southwest, with millions of people relying on the basin’s water for domestic use, agriculture, and industrial production. This basin’s water is overallocated to the point that natural flows rarely reach the ocean, and the issue is further complicated by growing populations and corresponding shifts in demand. Meeting these demands in a sustainable way is challenged by increasingly variable supplies, drier projected future conditions, and institutions that do not facilitate rapid reallocation of water during dry periods (e.g., leases, transfers, or conservation of water rights). These institutions and the legal framework that guides their actions (collectively known as The Law of the River) also fail to provide a defined process for curtailing water use during drought in the Upper Basin states (Colorado, Wyoming, Utah, New Mexico) to meet obligations to the Lower Basin states (Nevada, Arizona, California). We present results derived from a new modeling tool that integrates consideration of the natural, engineered, and institutional systems in the basin to characterize both the supply and financial risk of users throughout the region. This approach allows for the tracing of socioeconomic impacts of water shortages (both natural and regulatory) to individual water right holders and communities. We also identify relative socioeconomic impacts of basin-wide curtailment policy choices, as well as risk management tools and strategies that can mitigate losses associated with water scarcity and protect water right holders, regions, and stakeholders. This work is timely as policy makers in the CRB are considering a “compact call” curtailment of the Upper Basin to address an ongoing drought, but have not publicly committed to a pathway for how to enact such a curtailment and have only crude tools available for assessing the impacts of each potential choice. These preliminary results and modeling tool will provide clarity to these policy makers considering a “compact call,” as well as regional governments, investors, and insurers who are looking to evaluate the joint financial and supply risk of water scarcity in a large and growing region, with applicability to other basins facing similar risks.