Death by Spreadsheet

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for thumb_chapman_pincher.gifAt lunch over the weekend a City head-hunter, postulated the idea that much of the appalling risk and debt management by financial institutions was due to the ubiquity of invalidated or non-compliant spreadsheet data.

A logical step in a downturn is to cut and cut – be it staff and services – even abandoning operations. During such times there should be guidelines and options for austerity initiatives.  Management by spreadsheet alone without regard for long term impact on customer habits and overall asset and/or brand value is a bad choice. The following check list is a place to start before you start deleting cells.

1. Honestly analyse your business’ economic health.
2. Identify internal weaknesses.
3. Develop a contingency plan.
4. Create a worst-case scenario cash flow forecast.
5. Review the terms and conditions of your bank loan.
6. Write an opportunity-based business plan.
7. Search for acquisition opportunities within the industry.



Join the conversation

1 comment

Send me notifications when other members comment.

Please create a username to comment.

I am afraid that I have to agree with the Head Hunter on this one. I was once told by a senior audit partner of PWC that less that 60% of spreadsheets actually add up. Also over the last five years I have worked with a number of risk managers in financial institutions such as banks and insurance companies and in my opinion few among them truly understand what risk management actually is. Some have developed elaborate risk plans and risk registers but have failed to track the implementation of their risk controls, while some would also struggle to defend the accuracy and validity of their residual risk valuations. However, I suspect that the main culprits for the current sub-prime mess are greed, lack or regulatory governance, conflicts of interest by the accounting profession and ratings organisations and everyone believing their own marketing hype.