<p>Sensitivity analysis of the key error terms is the prerequisite to improve the accuracy and reliability of machine tools. The purpose of this article is to identify and compensate key error terms. Based on the IMD-H (Improve Modify D-H) parameter method, the error model of machine tools is established. According to the randomness of each error item of machine tools under actual working conditions, a novel concept of “Risk Equivalent Factor” is proposed to reflect the influence of the mean and variance of error items on the total error size and stability of machine tools, so as to identify the key error items. In addition, the coupling characteristics of multiple error terms are analyzed, and the influence of the random characteristics of error terms on the actual machining path is studied. The sensitivity analysis method proposed can more accurately identify the main error items that cause machining errors, which can be used for machine tool error compensation operations. Finally, the effectiveness of the dynamic sensitivity analysis method proposed was proved by the machining error compensation experiment.</p>