Sensitive analysis helps identify the key drivers of decision outcomes and evaluate the impact of uncertainty on decision-making1 pointTrueFalse

The statement is True.

Explanation

Sensitivity analysis is a crucial tool used in decision-making processes, particularly in fields such as finance, engineering, and project management. It involves altering the variables in a model to see how changes affect outcomes, thereby identifying which variables have the most significant impact on decisions.

By systematically changing input variables one at a time (or in groups), sensitivity analysis helps decision-makers understand the degree to which uncertainty in these variables influences the expected outcome. This approach provides insights into key drivers of an outcome, allowing decision-makers to focus on factors that are most critical to the success or failure of a project or investment.

Moreover, it helps in risk assessment by illuminating how sensitive outcomes are to changes in assumptions, thus facilitating more informed decision-making. In summary, sensitivity analysis plays a vital role in evaluating the impact of uncertainties, making it an essential part of effective decision management.