JPMorgan Chase suffered a mammoth trading loss last yearas a result of a huge position in credit derivatives that was puton by a trader in its chief investment office. But the bank'sreport on the $6 billion loss last month laid a portion of theblame on a very common problem: an error in a spreadsheet.
A spreadsheet that calculated the Value at Risk of the chiefinvestment office's portfolio contained an error in a formula thathad the effect of lowering the Value at Risk, according to thereport.
The risks involved in employing Excel spreadsheets arewell-known. Users can make mistakes as they key in data, enterformulas or combine multiple spreadsheets. As spreadsheetscirculate through the company, other users can add errors as theymake changes. There's also the possibility a user coulddeliberately introduce inaccuracies.
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Susan Kelly
Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.
