Scenario planning is a method used by managers to evaluate various views in terms of the operational, strategic and financial plan in a structured way. There is a need to evaluate various potential ideas that can transform the organization. Contingency planning help in focusing on the possible solution to challenges that the organization is likely to face. The manager needs to be sensitive in terms of recognizing points from ideas that are not clear. Contingency planning has helped many managers to address various deficiencies that the organizations they had anticipated and come up with the solution to the challenges.

Sensitivity analysis relates to contingency planning because it focuses on areas that are at risks to the organization; it makes the organization identify the challenges that it faces (Gantz & Philpott, 2015). Contingency planning involves planning for dangers that might come up in the course of streamlining the operations of the organization. Some risks have high consequences to the organization, and the organization is able to identify such risks through sensitivity analysis and come up with ways to reduce the risks. Organizations that don’t prepare for risks get affected the most.

Sensitivity analysis also helps the managers identify the areas within the organization that are likely to be influenced by the risk. If the risk is unavoidable, then the manager can come up with ways to reduce the impact of the risk to the organization. The managers usually develop a contingency plan of dealing with the challenge that the organization is anticipating will happen. Organizations need to come up with solutions to challenges that they are likely to occur so that the organization operations not to be affected much by the challenge.

Reference

Gantz, S. & Philpott D. (2015). Contingency Plan – an overview | ScienceDirect Topics. Retrieved from https://www.sciencedirect.com/topics/computer-science/contingency-plan