JPMorgan Chase suffered a mammoth trading loss last year as a result of a huge position in credit derivatives that was put on by a trader in its chief investment office. But the bank’s report on the $6 billion loss last month laid a portion of the blame on a very common problem: an error in a spreadsheet.
A spreadsheet that calculated the Value at Risk of the chief investment office’s portfolio contained an error in a formula that had the effect of lowering the Value at Risk, according to the report.
But businesses still have quite a ways to go. “Nobody I have seen or talked to yet is at that optimal place,” Juergens said. “Even the folks that are at the leading practices level, with software in place, they are still going through the process of going through all the spreadsheets in the enterprise and enrolling them. There are so many spreadsheets, they do so many different things, they have been built and constructed with so many methods, they’re stored all over the place–there isn’t a magic button you can push to control and manage all the spreadsheets. That’s why companies aren’t done yet,” he said.
According to Juergens, progress varies by industry, with financial services firms the farthest along because of pressure from their regulators.