Do you use spreadsheets to manage complex data? Could spreadsheets pose a risk to your business?
Spreadsheets have a place. They are a great tool for most day to day businesses calculations. But when it comes to complex financial calculations or long term forecasting and budgeting there are real and risky limitations to spreadsheets.
We know from experience that spreadsheets are not necessarily the best tool for the job, but don’t just take our word for it; here are some quotes from leading experts in this field:
“Research on spreadsheet errors began over fifteen years ago. During that time, there has been ample evidence demonstrating that spreadsheet errors are common and nontrivial. Quite simply, spreadsheet error rates are comparable to error rates in other human cognitive activities and are caused by fundamental limitations in human cognition, not mere sloppiness. Nor does ordinary ‘being careful’ eliminate errors or reduce them to acceptable levels.”
Ray Panko, 2000 http://arxiv.org/abs/0802.3457
“Spreadsheets have been shown to be fallible, yet they underpin the operation of the financial system. If the uncontrolled use of spreadsheets continues to occur in highly leveraged markets and companies, it is only a matter of time before another ‘Black Swan’ event occurs [Taleb, 2001], causing catastrophic loss. It is completely within the realms of possibility that a single, large, complex but erroneous spreadsheet could directly cause the accidental loss of a corporation or institution”.
Grenville J. Croll, 2009 http://arxiv.org/abs/0709.4063