Spreadsheet Risk

This book offers a variety of strategies and tactics that financial institutions can employ to manage their exposure to this significant business risk. It is the first book to comprehensively address the many problems caused by the widespread and naïve use of spreadsheets in organisations.

The book explores the notion that users do not take into account that through their use of a spreadsheet to solve a problem, they are deploying a complex software application. Technology can be faulty, but also spreadsheets are used, misused, abused and through the non-adoption of any of the disciplines of software engineering. The apparently simple task of creating a spreadsheet, for example, to calculate the cost of building a garden wall will be frequently performed incorrectly unless independent and comprehensive testing has taken place. Given that most financial spreadsheets are significantly more complex than this, it is essential that spreadsheet users come to understand how careful they must be in reaching decisions that are supported by spreadsheet models.

The purpose of the book is to lay bare the various risks of using spreadsheets, supported by a comprehensive summary of the well-established academic and commercial research on the subject. The book will include some simple exercises for the reader to perform which will support the truth of the research being reported.

The book outlines a set of strategies and tactics which can be put in place to control the risks of using spreadsheets, and introduces the emerging discipline of spreadsheet engineering. It considers technological solutions to spreadsheet risk, looking also at the alternatives to using spreadsheets.

Table of Contents

Preface       

Introduction        

Part I  Spreadsheet Risks

 The Cell Error Rate       .

 The Spreadsheet Error Rate     

 The Impact of Errors      
  
 Types of Error       

 The Ubiquity of Spreadsheets    
 
 The Ubiquity of Spreadsheet Error    
  
 Human Aspects       
  Overconfidence
  Interpretation
  Fraud
  Employee Migration

 Machine Aspects      

 Legal Aspects        
  Companies Acts
  Sarbanes Oxley
  Civil, Criminal & Medical Negligence
  Other Regulation
  The subversion of control

 Documentation       

 Archiving and Backup      

Part II Remediating the Risks

 Assessing the problem     

 Determining Importance & Criticality    .

 Identifying Spreadsheets to test      

 Testing & Correcting Spreadsheets   

 Maintaining System Integrity     

 The Challenges of Organisational Spreadsheet Remediation 

Part III Spreadsheet Engineering

 The Software Development Lifecycle    

 The Eight Principles of Spreadsheet Engineering   

 Designing, Building and Testing Better Spreadsheets  

 Spreadsheet Use, Maintenance, Backup, Archival and Disposal 

 Promulgating Spreadsheet Engineering    

Part IV Spreadsheet Alternatives

 A History of Alternatives   
 
 Commercial Alternatives     

 Alternative Architecture Research    

Part V Summary & Conclusion      

Appendix A Exercise Solutions:      
  Garden Wall Exercise Solution
  Balloon and Basket Exercise Solution
  Other exercises

Chapter Notes        
  
References         
  
Bibliography          
  
Index