A novel approach is developed for analyzing power system vulnerability related to extraordinary events. Vulnerability analyses are necessary for identification of barriers to prevent such events and as a basis for the emergency preparedness. Identification of cause and effect relationships to reveal vulnerabilities related to extraordinary events is a complex and difficult task. In the proposed approach, the analysis starts by identifying the critical consequences. Then the critical contingencies and operating states, and which external threats and causes that may result in such severe consequences, are identified. This is opposed to the traditional risk and vulnerability analysis which starts by analyzing threats and what can happen as a chain of events. The vulnerability analysis methodology is tested and demonstrated on real systems.