Sensitivity analysis – iimskills

Sensitivity analysis involves exploring how alterations in independent variables affect a dependent variable within a defined set of conditions. This method assesses the resilience of models or systems by examining how varying inputs influence outputs. It is critical in decision-making, financial modeling, engineering design, and risk assessment, offering insights into how outcomes react to shifts in crucial factors or assumptions. By pinpointing which variables wield the most substantial influence, sensitivity analysis enables informed decision-making and effective risk management.

Sensitivity Analysis – A Comprehensive Guide