# ⚠ What is it..❓

### ℹ Asking “What-if❓” — under different — scenarios — circumstances — conditions.

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### ℹ Assess possible outcome because of changes.

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### ℹ Example❓ — recalculate net present value (NPV)…

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### 🤔 What if demand fell by 10% ❓

### 🤔 What if variable costs are 5% higher ❓

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### ℹ Sensitivity Analysis — financial model — simulation modelling and analysis.

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### ℹ Predict — outcome of a decision — given certain range of variables.

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### ℹ Determine — impact — target variables — based on changes in other variables — input variables.

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### ℹ Discover — maximum possible change in one of the parameters — before opportunity turns non-viable.

# ⚠ What advantages..❓

【01】Sensitivity Analysis – Any advantage❓ How useful❓

### ⭐ Yes, as below indicate…

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### ℹ Facilitate subjective judgement — decide likelihood — consider various possible outcomes.

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### ℹ Identify crucial areas — success of the project — monitor carefully.

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### ℹ Indicate critical of the forecasts — uncertain.

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### ℹ NO complicated theory.

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【02】What is risk ?

⭐ **learn more ➤**

### ℹ Facilitate subjective judgement — decide likelihood — consider various possible outcomes.

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### ℹ Identify crucial areas — success of the project — monitor carefully.

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### ℹ Indicate critical of the forecasts — uncertain.

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### ℹ NO complicated theory.

# ⚠ What disadvantages..❓

### ℹ Focus single variable changes at a time — impractical.

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### ℹ Assume independent changes to variables — without changes on other variables — unrealistic.

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### ℹ In reality — if material prices ▲ — selling price also ▲ — changes in 2 variables.

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### ℹ NO consider probability — NO likelihood of the change.

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### ℹ Identify only — how far a variable needs to change.

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### ℹ Identify which decisions can be made — NOT to the correct decision — NOT optimising enough.