Power system contingency is an operating condition that can occur due to a discontinuity in the system and leads to overall system voltage instability. In recent years, Ethiopian Electric Power has experienced partial power outages in the North West region. In the case of the event, parts of the grid system have been disturbed and finally, the system has become partial blackout. In this thesis, the overall single-line diagram of the northwestern region of the system is modeled by DigSIELNT software with 2 generators, 15 buses, 15 transmission lines, and 3 external grids and the Newton-Raphson approach is adopted to perform the power flow. The vulnerability assessment of the system was taken by using the overload performance index and the voltage performance index. The indices allow assessing two different symptoms of system stress such as voltage instability and overloads. Also, the load shedding system was performed by using particle swarm optimization to know an appropriate amount of load to be shed for each load bus. For N-1 line outage conditions, performance index results indicate that, the BDII-230 bus to GoII bus line has the highest performance index value. The most vulnerable buses in the network in terms of voltage limit violation due to this line interruption are mainly Gondar load bus and Metema load bus. And their voltage profile is 0.908, and 0.923 per unit respectively. For loading condition: - When the load demand of the load bus increases by 50%, the Gondar load bus has the highest performance index value of than remaining load buses, at that time the voltage profile is 0.8879 per unit. Therefore, load-shedding measures have been taken to reduce the impact. After taking the load shedding action, Gondar load bus real power magnitude has been reduced from 0.747 to 0.506 per unit or load has reduced from this bus which contain 0.241 per unit amount of real power magnitude and the voltage profile has been updated from 0.8879 to 0.9538 Per unit. Similarly, when the load demand increases by 75%, it has the highest performance index and the voltage profile is 0.8547 per unit. But after taking the load shedding action, the real power magnitude has decreased from 0.871 to 0.590 per unit and also the voltage profile has been updated from 0.8547 to 0.9522 per unit. Therefore, the results of the study used as a guide for system operators and expansion planning. Keywords: Contingency, DigSIELNT software, Load shedding, Performance index,