There are dangerously poor attitudes within the UK FS sector to business critical data managed in spreadsheets and similar databases. That’s according to new research from ClusterSeven on C-level executives and senior managers working in the industry.

Fifty one per cent of C-level executives say there are either no usage controls at all or poorly applied manual processes over the use of spreadsheets at the firms. Eighty nine per cent admit they rely on manual oversight to maintain data integrity, with 11 per cent saying there is an automated control policy that allows them to fully understand changes between different versions of spreadsheets and see a clear audit trail for data.

At the same time, 55 per cent of C-level executives rate spreadsheet risk – the risk of serious financial/reputational loss from poor management of corporate spreadsheets and databases – as either ‘very serious’ or ‘serious’, while 15 per cent admit their firm has suffered a significant data breach. Moreover, 19 per cent say that they use spreadsheets to manage values of over £1 billion, with the average from all respondents at £350 million. Ninety three per cent use spreadsheets as much as, or more than any other applications for managing financial data with 53 per cent saying that they either only use spreadsheets or use them more than other applications for managing financial data.

Ralph Baxter, CEO at ClusterSeven, says: “Financial services firms, and the senior managers and executives that run them, rely heavily on spreadsheets for much of their business critical processes. However, there are significant risks associated with this and all stakeholders are now waking up to what these are. Risks include anything from basic ‘cut and paste’ errors to miscalculations, fraud and corrupted files. The losses announced by some large financial services firms are tangible, real-life indications of the dangers and risks firms are exposed to, and it is not surprising that regulators and supervisors such as the Basel Committee are now focusing on spreadsheets as a fundamental carrier of corporate data. No longer will it be possible to hide behind overly-optimistic IT plans suggesting that business-critical spreadsheets will soon be eliminated. The research reveals that 51 per cent of C-level executives think that regulators will become more focused on spreadsheets over the next 12 months. There has been a clear shift in sentiment and now, looking forward, internal audit and other key functions should assess the effectiveness and efficiency of the internal control, risk management and governance systems and provide assurance on these systems.”

He adds: “Many people will be astonished just how reliant firms are on spreadsheets and similar databases for their day-to-day processes given how many billions of dollars have been invested in standard financial applications, such as ERP and Business Intelligence. Senior managers, including C-level executives, are also spending significant amounts of time on spreadsheets. Where this manual activity is part of routine processes much of this effort can be easily replaced by automated checks using spreadsheet management technology.”

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