Spreadsheet risk is a type of operational risk defined as “the risk associated with deriving a materially incorrect value from a spreadsheet that will be used in making a related decision”.
In other words, incorrect value on spreadsheet = potentially wrong decision
In other words, spreadsheet = potential disaster!
What can you do to help prevent spreadsheet risk?
You need a robust control framework, suggestions include:
- Data validation and checks – eg error warnings if values are greater than or less than expected values
- No hard coding – assumptions should be in a clearly labelled section of the spreadsheet – not hard coded
- Review assumptions – are these still relevant and accurate?
- Documentation – clear procedure notes on which cells need to be updated, remembering to update pivot table ranges, formulas and dates
- Review – key spreadsheets need multi stage reviews
- Focus on key spreadsheets – not all spreadsheets can have multi stage reviews – focus on the key ones for your business
- Sense check your answers – do not rely on the spreadsheet – use your own knowledge and challenge the results
- Open communication – make sure people feel they can speak up if their spreadsheet looks to have errors or they do not understand how to use it
- Training for employees – especially if new to the role and need to upskill to be able to understand the spreadsheets in detail