What is the Difference between Scenario, Sensitivity, Uncertainty and Risk Analysis
Whenever we think about doing some work, we try to analyze it for percentage of success or failure on the basis of some quantitative and qualitative measures, tools and principles. Of course this is the right way to judge the possibility of success or failure. There are different types of Analysis, like scenario, sensitivity, uncertainty and risk. Here we are describing brief difference between them. It will be easier for you to understand them now.
Scenario Analysis
The process, in which we analyze possible future events by considering alternative possible outcomes, is called as scenario analysis. This method does not try to show exact picture of future, rather it presents several alternative future developments. This method of analysis does not rely on historical data instead it shows several scenarios to show possible future outcomes.
Sensitivity Analysis
How uncertainty in the output of a model can be assigned to different sources of uncertainty in the model input, is called as sensitivity analysis. Sensitivity analysis is useful for computer modelers, as they support decision making and enhance communication with decision makers. You can also know about the model developments and can find out the errors in the model with the help of sensitivity analysis.
Uncertainty Analysis
This is very important type of analysis. Uncertainty analysis examines the uncertainty of variable that are often used in decision making problems. Uncertainty analysis makes technical contribution to decision making by the quantification of uncertainties.
Risk Analysis
Another type of analysis is the risk analysis. Risk analysis is the science of risks and their probability and evaluation. In science and engineering probabilistic risk assessment is employed. Basically, it is the assessment of risk factor, involved in any project.
Scenario vs Sensitivity vs Uncertainty vs Risk Analysis
All these are different analytical techniques which are used in different fields of applications. For instance, sensitivity analysis is useful for computer modelers and Uncertainty analysis is helpful in decision making. Risk analysis has many further branches, which are employed in different fields. Scenarios analysis is about the possible event of future while risk analysis is about the risks, their probability and evaluation. Uncertainty analysis deals with the uncertainty of the variable while sensitivity analysis helps in finding the problems in a model. All these types of analysis are really helpful and are used in different ways. We cannot deny the importance of anyone of them.
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