Sensitivity Analysis priorities all the input assumptions based on their contribution to risk, or impact on profitability. Typical spreadsheet models have many, many inputs, and prioritization is a critical step in practical risk analysis. To perform in-depth analysis on every variable is uninformative, and very time inefficient.
To capture uncertainty, Risk Detective asks you to determine a Low, Base and High value for each input assumption. This range captures your uncertainty about future possibilities. The wider the range, the more uncertain you are.
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Risk Detective will vary all input assumptions through
their Low, Base and High values, and monitor their impact on
profitability. This information allows prioritization, and can
generate a Sensitivity Chart.
This example chart shows that Quality and Share have a more significant impact on profit than does Cost. |
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