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Spreadsheets: Empowering Users while Managing Operational Risk

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By Brian Sentance, CEO, Xenomorph

I read a great piece in the FT by Lisa Pollack recently about the future of spreadsheets and their potential to bridge the gap between those of us who don’t program and those that do. The piece referred to the broad global community of more than 750 million Excel users – many of whom use spreadsheets for relatively simple tasks like record keeping.

But within the financial services industry, I feel spreadsheets have already bridged much of the gap between business users and developers. From equity analysts constructing company valuation models or fixed income analysts modelling the impact of prepayment risk, through to financial advisors putting together a retirement plan, spreadsheets have really empowered market professionals. Their sheer flexibility, ease of use and ever-growing range of statistical functions and operations has enabled many core, and often fairly complex, business processes to run inside them.

However, spreadsheets also suffer from some key vulnerabilities:

1) They are difficult to control. Unlike server-side technology, they are harder to lock down and the risk that mission critical information is lost or altered, either accidentally or through malicious intent, tends to be a real concern to operational risk managers.

2) They typically run outside enterprise data management (EDM) processes and controls, and are therefore dependent on a single vendor’s invalidated data as an input. Equally, the output of their calculations is not validated.

3) They are not always that scalable, particularly when it comes to handling real-time datasets and complex calculations. As a client-side technology, they tend to be restricted both in terms of processing horsepower and I/O.

The dilemma facing most firms is therefore: how do you maintain the benefits of spreadsheet usage while addressing its drawbacks? This was a problem that many of our clients had struggled with. They wanted to take models that had been developed in Excel and port them over to an environment that included the right data validation checks and EDM processes. They also wanted their models to run on technology that was robust, auditable and offered the right levels of access control given the critical nature of some of their calculations.

That’s why over several years we developed our SpreadSheet Inside (SSI) technology and incorporated it into TimeScape EDM+. SSI allows our customers to port spreadsheet calculations into a secure, audited environment, where both data inputs and the output of the calculation can be run through proper data validation checks. By enabling out-of-the-box integration with leading pricing and analytics platforms like Numerix and Fincad, we ensure our customers can support even the most sophisticated models and functions.

Finally, TimeScape EDM+ also includes Excel add-ins, so if an end user insists on maintaining their final models in Excel, they can at least feed them with data that has been validated. For more information, please download our White Papers outlining the operational risks of spreadsheet usage, and how TimeScape EDM+ mitigates those risks.

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