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Different techniques for analyzing project risk require different input variables and assumptions. Suppose you are using the sensitivity analysis technique to evaluate project risk. You
Different techniques for analyzing project risk require different input variables and assumptions. Suppose you are using the sensitivity analysis technique to evaluate project risk. You would change in the model to evaluate the effect of the input factors on the expected value. one input variable at a time several input variables together Danielle is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity curve shown on the graph. NPV (Millions of dollars Base Case NPV Base Case Price -30 -24 18 -12 -6 06 12 18 24 30 CHANGES IN SELLING PRICE IPercent) This curve implies that the project is very sensitive to changes in the price of the product. The project's NPV is likely to become negative if the price for which the product can be sold decreases by Along with the sensitivity analysis, Danielle is including a scenario analysis for the project in her report, giving the
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