Intermediate level · Module 4: Scenario Planning and Sensitivity · Lesson 3 of 3
Sensitivity and Communicating Uncertainty
Find which assumptions move results most and present uncertainty honestly.
In this lesson you will
- Run a one-at-a-time sensitivity analysis
- Present ranges and key assumptions to decision-makers
Key concepts
sensitivity analysiskey assumptionstornado rankingranges
The lesson
Sensitivity analysis changes one assumption at a time and records the effect on profit. Ranking the effects shows which assumptions matter most.
In the branch model, a margin of 25% instead of 30% cuts base profit from 120,000 to 70,000 SSP — so margin deserves close monitoring.
Present results as ranges, name the key assumptions and propose leading indicators to watch after the decision.
Step by step
- Change each assumption by a realistic amount.
- Record the effect on profit.
- Rank assumptions by effect.
- Write the uncertainty section of the briefing.
Practice activity
Complete the sensitivity analysis and briefing for the branch decision.
Expected result: A ranked list of key assumptions and a briefing with ranges.
Check your understanding
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What does sensitivity analysis show?
Show answer
Which assumptions have the biggest effect on results.
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How should uncertain results be presented?
Show answer
As ranges with key assumptions and indicators to watch.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.