- Press Articles
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One of the unwritten truths of the modern financial world is the fundamental reliance on spreadsheets for managing business critical data and information. It is unsurprising to find financial institutions such as retail banks, pension funds and insurance firms running hundreds of thousands, millions even, of active spreadsheets – usually Excel - and why?
FINANCIAL SERVICES FIRMS AT RISK AS C-LEVEL EXECUTIVES ADMIT TO POOR MANAGEMENT OF BUSINESS CRITICAL DATA
More than nine out 10 (93%) use spreadsheets as much as, or more than other financial applications in managing financial data
More than half of financial services groups in the UK have poorly applied or no controls for managing business-critical spreadsheets, leaving them open to the problems....
As a result of a spreadsheet error, the degree to which the [bank's] marks were adjusted — by a separate middle office function — was very limited. By May, however, this was revised when the calculation errors were uncovered.
The New Statesmen’s tech writer, Alex Hern, asks “Is Excel the most dangerous piece of software in the world?” His question was prompted by the JPMorgan Task Force Report into the Chief Investment Office’s $6 billion-plus loss. It found the bank’s Value at Risk (VaR) was being calculated with an Excel spreadsheet that “required time-consuming manual inputs to entries and formulas, which increased the potential for errors.”
....the way regulators are looking at risk and other reports from financial institutions. It’s not just about the answer anymore; the regulators want to understand the models underlying the reports and – more pertinently to us – whether the data used in the models is both accurate and consistent.
While outsourcing partners pride themselves on their ability to maintain high quality data management standards and reduce the costs of running processes, there is a vital piece of business activity that warrants particular scrutiny. This is the use of Excel spreadsheets: firstly as a means of sharing critical data between the company and outsourcing partner; and secondly as a component of key business processes that must remain in the company even after the outsourcing. When business processes are ‘split down the middle’ like this, one could argue that the job is only part done.
Compliance is working as a catalyst towards data quality and enterprise-wide risk management at insurance firms, thinks Lloyd’s underwriter Canopius.
Heightened compliance demands for better data quality and pressure to deliver enterprise-wide risk management (ERM) frameworks are driving industry change, thinks Bradley Cass, head of risk and compliance at Canopius.
Ralph Baxter, chief executive of ClusterSeven, the data management firm partnered with Canopius, stresses that moves towards improving the standard of information fed into a firm represent an industry shift towards better data quality.
Transparency, control and validation of critical business data is an increasingly serious concern for the financial services sector. Banks, insurance companies and actuarial firms are facing up to the fact that they need to tackle the data risk issue as a matter of urgency. However, a major part of this challenge lies outside the knowledge of IT departments.
What links a billion-dollar reporting mistake by a global oil company, an accounting error by outsourcing specialist Mouchel, and an arithmetical error overstating the strength of the UK construction industry by the Office of National Statistics? The answer is spreadsheet risk, and control errors with data management.
2011 should go down as the most significant year yet for errors in the sea of unstructured financial data - increasingly seen as part of the Big Data problem engulfing all modern institutions. One wonders what 2012 will bring.
ClusterSeven and Actuarial Post surveyed readers of the magazine in October and early November on the use of spreadsheets and the financial data files that move and manipulate information between business systems.
For some readers it may be truly extraordinary that 84% of the insurance risk management and analysis supporting your pensions and policies are significantly, or entirely, dependent on the humble spreadsheet.
Poor spreadsheet controls are a weak link in many organisations. Dave Corbin is an internal auditor and outlines an approach to the problem.
Reducing the financial services industry's reliance on spreadsheets is a common aim, but such an undertaking is fraught with obstacles. In the meantime, Faye Kilburn asks what firms should be doing to reduce “spreadsheet risk”. ClusterSeven CEO Ralph Baxter contributes some background on an industry-wide issue, with the article as a whole providing a useful overview both of the problem and of the range of potential solutions.
In this article for Insurance Insider's Insider Quarterly Magazine, ClusterSeven CEO Ralph Baxter and Paul Latarche of Moore Stephens Consulting review the problem of unstructed data in the context of Solvency II. Many insurance providers make heavy use of spreadsheets for everyday data storage and processing, which can present difficulty when set against Solvency II's stringent requirements for transparency of data and data lineage as affecting the internal model. Tracing a complete dependency map through this 'spreadsheet anarchy' can appear to be an impossible task — but by using the ClusterSeven Enterprise Spreadsheet Manager insurers can bring order to this chaos and so resolve the problem with ease.
Excel is and will remain an essential business tool because it allows users to meet novel data requirements as and when they arise. This is particularly true in the accounting industry, where data needs change constantly, often warranting an immediate response. In this article for Accounting Today, ClusterSeven CEO Ralph Baxter urges accountants to recognise and embrace the utility of Excel, but also to ensure that their key spreadsheets are adequately monitored and controlled. The ClusterSeven Enterprise Spreadsheet Manager (ESM) dramatically improves users' ability to manage their spreadsheets without undermining the flexibility that makes them useful in the first place, eliminating the risks that the bring to the business while preserving and enhancing the benefits.
Spreadsheets are an unfortunate necessity for companies attempting to keep pace with the ever changing requirements of business, so it is surprising how little attention is given to managing spreadsheet risk. Interested readers may wish to click through to Linda's lengthier article on SearchCIO.com for a more detailed analysis of the problem (registration required).