MS Excel and Aspirin: Side-by-side on the risk manager's desk

I'll talk in a future post about how and why technology is playing a crucial role in effectively managing risk and compliance. But not every technology tool provides the right functionality to measure, manage, monitor risk. Take spreadsheets for example.

The spreadsheet is an oft used tool in the world of risk management- yet it is also just as often maligned. Ask any modern business person, or really any computer savvy individual, about spreadsheets and what often follows are eye rolls, shrugs, exasperated looks... you get the idea.

Spreadsheets can be great for organizing data, no doubt. But it doesn't take long to get frustrated while using them. You change one little box and a chain reaction that lasts pages interrupts formulas you have been working on for months. Finding a mistake is like finding a needle in a hay stack, not to mention that the average person can only do so much with spreadsheet applications without needing some sort of outside training to really open up the program's potential.

Companies and individuals need simplicity, flexibility, and most importantly organization when collating information and so far there has yet to be a reliable, risk averse, capable product.

Now I'm not saying Excel is the anti-Christ, but some of its best attributes are also its worst, particularly for measuring, managing, and monitoring risk.

So why is effective risk management and compliance best left off the spreadsheet?

• Flexibility and easy access means data can be instantly accessed and changed by anyone, creating a high risk profile.
• Ease of use means many people overestimate their abilities and aren't properly trained.
• In order to properly assess the demands of mitigating risk and maintaining proper compliance regulations applications need real time data alerts that are proactive, they need to manage and maintain multiple processes simultaneously.
• Applications also need easy distribution and tracking of results and finally, risk-ranking. The program needs to be easy to use and easy to train people to use.
• There should be one master version where all changes are added to the same document every time- not disparate versions making their way around email chains.

As much as I complain, it doesn't appear that Excel will be going away anytime soon, or that Bill Gates will be reading this blog to find out how he can fill Excel's capabilities gap.

The good news is there are companies offering services (including my own, the Keane Organization) to fill Microsoft Excel's capabilities gap, while keeping the benefits of traditional spreadsheet applications.

I also see more companies coming to this reality on their own as traditional tracking tools, like spreadsheets, fail to adequately protect them from risk.