Which of the following accurately defines sensitivity analysis?

Sensitivity analysis is defined as a method to assess how changes in input variables affect the outcome of a model or decision. This technique plays a crucial role in helping decision-makers understand the degree to which different factors influence results. For example, in financial modeling, sensitivity analysis allows analysts to see how variations in sales volume, cost of goods sold, or operating expenses can impact profits or cash flow. By identifying which inputs have the most significant effect on the results, businesses can make informed decisions and develop strategies to mitigate risks associated with those variables.

The other options feature concepts that, while relevant in various contexts, do not capture the essence of sensitivity analysis. It is not solely focused on marketing strategies, nor is it strictly a forecasting tool or a type of risk management strategy. Sensitivity analysis specifically emphasizes the relationships between input changes and their effects on outcomes, making it an essential practice in financial analysis and decision-making processes.