Sensitivity analysis is widely used across various fields to assess how different variables impact a system's performance or outcomes. Here are some common areas of use and applications:

1. Economics and Finance

Investment Decision-Making: Sensitivity analysis helps investors understand how changes in interest rates, inflation, or market conditions affect returns on investment.

Risk Assessment: Financial models use sensitivity analysis to assess how changes in input variables (e.g., exchange rates, interest rates) impact financial metrics like net present value (NPV) or internal rate of return (IRR).

Portfolio Management: It is used to evaluate how different asset allocations affect portfolio risk and return.

2. Project Management

Cost Estimation: In project planning, sensitivity analysis helps project managers understand how uncertainties in project costs or timelines can impact overall project performance.

Resource Allocation: It aids in identifying which resources (time, money, manpower) are most critical to the project’s success and where buffer should be applied.

3. Engineering and Manufacturing