ATTENTION: You are viewing a page formatted for mobile devices; to view the full web page, click HERE.

Main Area and Open Discussion > Living Room

Is Excel the most dangerous software in the world?

(1/4) > >>

I'm a major Excel nut, (and someone who lost a load of equity in his home since 2008) so I found this interesting. 
An excerpt from the book: Dashboards for Excel (Jordan Goldmeier & Purnachandra Duggirala)

No, really, it’s possible that Microsoft’s Excel is the most dangerous software on the planet.
      —Tim Worstall in Forbes Magazine
Worstall is referring to JPMorgan’s use of Microsoft Excel and its potential contribution to the global recession that began in 2008. The story is a familiar one. JPMorgan, one of the big banks, required a new way for their chief investment officer to model the risk associated with their portfolio of collateralized debt obligations (CDOs) . CDOs, as you might recall, are those complex financial instruments that are comprised of a bundle of mortgages used to speculate and manage the risk for default. In the end, many homeowners eventually defaulted on their mortgages. Yet, JPMorgan’s model had not captured this at all. According to an internal report by JPMorgan, their model contained an error that “likely had the effect of muting volatility by a factor of two and of lowering the VaR [value at risk].” What had happened? How could one of the biggest banks employ a model that was so absent from reality? According to the report, their model was “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another.” The error was generated when “After subtracting the old rate from the new rate, the spreadsheet divided by their sum instead of their average, as the modeler had intended.” Worstall, like many others, blames Excel. It’s too insecure, and there’s no audit trail, he contends. Its flexibility is its greatest strength and Achilles heel. His argument isn’t a new one, of course. Without proper internal governance and procedures regarding archiving, getting lost in a nightmare of error-ridden spreadsheets and mixed-up versions is a real possibility. But is that really what happened in the case of JPMorgan? Are more audit controls needed? I’m not so sure.

I'm reminded of that old truism about a poor tradesman always blaming his tools >:(

It's an interesting statement.  What I understand from this and from what I've experienced in my career, excel is used in a very versatile way in the computer world.  It's a very powerful application, very common (possibly the most common application in the world).  If you spend any time using a computer for a living, you probably use excel.  I've seen it used in crazy ways, from prototyping applications (using the grid to draw stuff), to hardcore database-like applications that should be done on access or something built for that.  Excel hits that sweet spot as the go-to tool for anything.

Now, I've also seen these financial guys use excel in their stuff too, and it's crazy.  Like i said, it should be done in a proper database.  And a lot of people just do it in excel.  There's a joke that it's called "excel-gineering".  And auditing an excel document is a nightmare if something goes wrong.  Finding that wrong formula, wrong cell, wrong link, etc. is a terrible excercise.  And if important things are built into it, yea, i can see it being considered a dangerous tool in a very round-about, abstract, indirect kind of way.

But in that sense, the internet-connected-computer is the most powerful weapon ever created.  or is it the h-bomb?

I'm pretty sure "Excel" = 666 in some kind of numerology. :)

I'm reminded of that old truism about a poor tradesman always blaming his tools >:(
-Target (November 11, 2015, 06:44 PM)
--- End quote ---

Yeah, right. Excel should be the real culprit, rather than the greed and leeching zillions out of the economy without actually producing anything.


[0] Message Index

[#] Next page

Go to full version