What is Financial Sensitivity Analysis?
Financial sensitivity analysis examines how the value or outcome of a model changes when one or more input assumptions are varied. It identifies the variables that have the greatest impact on results.
How It Works
- Build a base-case financial model.
- Flex key inputs one at a time (price, volume, FX, rate).
- Plot outputs to identify the most sensitive drivers.
Saudi Context
Saudi project sponsors use sensitivity analysis on giga-projects to test outcomes against oil price, USD/SAR (effectively pegged), interest rates, and Saudization costs.
Example
A solar project NPV is most sensitive to plant capacity factor and tariff escalation — a 1% drop in capacity factor reduces NPV by SAR 80 million.