Sensitivity and Risk Analysis

Every business case has assumptions. The sensitivity analysis tells you which assumptions matter most and the risk analysis tells you what happens when they break. A business case without these sections is asking the CFO to trust your numbers without testing them. The CFO will test them anyway — in their head, with worse assumptions than yours. Providing the sensitivity and risk analysis yourself is both more accurate and more credible than letting the CFO improvise.

Sensitivity — Key Assumptions:
──────────────────────────────────────────────────────
Assumption       Pessimistic   Base    Optimistic
──────────────────────────────────────────────────────
Adoption rate       60%         80%       95%
Productivity gain   22%         34%       42%
Time to full value  9 months    6 mo.     4 months
──────────────────────────────────────────────────────

NPV by Scenario:
  Pessimistic: ($12,400)  ← Slightly negative
  Base:         $43,300
  Optimistic:   $89,700

Breakeven by Scenario:
  Pessimistic: Month 14
  Base:        Month 10
  Optimistic:  Month 7

Key Finding: The business case is positive
in all scenarios except pessimistic.
Adoption rate is the swing variable —
if adoption reaches 70%+, the case is solid.

1. Identify the Swing Variables Which 2-3 assumptions have the largest impact on the outcome? Run each independently through pessimistic/base/optimistic values while holding others constant. The variable that swings NPV from positive to negative is the one the CFO will focus on. Have a credible answer for why the base case is realistic.
2. Quantify the Downside The pessimistic case is the one that matters most for approval. If the pessimistic case is still positive, the investment is low-risk. If it is slightly negative, the risk is manageable. If it is deeply negative, the investment is a bet — and the CFO needs to decide whether the potential upside justifies the downside exposure.