The Sensitivity Factor: Are your Forecasts built to flex with the winds of change, or be erased by them?

February 27, 2024
Much like our worlds tallest skyscrapers and awe-inspiring bridges, if your business models are also to stand the test of time, they too must flex in the face of external change forces.

Sensitivity analysis plays a crucial role in Financial, Workforce and Operational best practice modelling by providing valuable insights into the sensitivity of outcomes to changes in key variables.

This supports informed decision-making, risk management and stakeholder engagement. Ultimately enhancing the effectiveness and reliability of your models. Getting the right support on ensuring you understand and plan for sensitivity requires a team used to providing Best Practice Business support.

Ease Decision Making:
Sensitivity analysis enables better decision-making by highlighting which variables have the most significant influence on the model’s outputs. By understanding how changes in input parameters affect the results, decision-makers can prioritise actions or strategies to mitigate risks, capitalize on opportunities, or optimise performance.

Understand Risk Assessment:
It helps in assessing the impact of changes in key variables or assumptions on the outputs of your model. By varying one or more inputs while keeping others constant, sensitivity analysis provides insights into the model’s sensitivity to changes in different factors. This allows stakeholders to identify and understand the key drivers of your organisation’s performance and assess the associated risks.

Ensure full Communication and Stakeholder Engagement:
Understanding Sensitivity enhances communication and stakeholder engagement by providing a transparent and quantitative analysis of the model’s sensitivity to key inputs. By presenting sensitivity analysis results in a clear and understandable manner, stakeholders can make informed decisions, align expectations, and foster trust in the reliability of the model’s outputs.

Identifying which variables have the most significant impact on the results. Your organisation can then focus on fully embracing those factors to enhance overall efficiency, profitability, or value creation.

These areas don’t come together by accident. Just like the buildings; meticulously planned, it takes a high degree of forward thinking, and active intent to design forecasts capable of flexing in this way. The details… will vary from one business to another, but the approach remains constant.

At Plan Assist we have our foundations deeply rooted in Best Practice Modelling. We know the topic well, and the difference it makes to the success of our clients. That’s why the approach we take with our clients has these key outcomes in mind from the very first interaction we have.



Hands pointing at a laptop on a desk