This series of articles will give you an overview of how to manage spreadsheet risk. These articles are written by Myles Arnott from Excel Audit
- Part 1: An Introduction to managing spreadsheet risk
- Part 2: How companies can manage their spreadsheet risk
- Part 3: Excel’s auditing functions
- Part 4: Using external software packages to manage your spreadsheet risk
An Introduction to managing spreadsheet risk
The potential impact of spreadsheet error hit the UK business news recently after a mistake in a spreadsheet resulted in outsourcing specialist Mouchel issuing a major profits warning and sparked the resignation of its chief executive.
See the full news article here: http://www.express.co.uk/posts/view/276053/Mouchel-profits-blow
Over the next few weeks we will look at the risk spreadsheets can introduce to an organisation and the steps that can be taken to minimise this risk.
Why do we do what we do in spreadsheets?
Because we all love Excel, right? True certainly, but the main reason is that it is intuitive, flexible, cost effective and provides quick solutions to high priority day to day problems.
And what is the alternative? The IT department. The simple fact is that end user developed spreadsheets often fill the gap between the current business requirements and formally managed IT systems.
Unfortunately this reliance on spreadsheets, rather than robust, well governed IT solutions can add significant risk to an organisation if it is not properly managed.
So what is spreadsheet risk?
Spreadsheet risk is the risk that a business could lose revenue and profit, fail to comply with regulators or find its reputation damaged as a result of spreadsheet error (be it fraudulent or unintentional).
Poorly structured spreadsheets can also lead to a loss of productivity and increased audit costs, further damaging the bottom line.
A recent study of typical enterprise spreadsheets by the Tuck School of Business at Dartmouth found that 94% of spreadsheets and 5% of all formulae within spreadsheets contain errors.
Some further examples of the impact of failing to manage spreadsheet risk
The European Spreadsheet Risk Interest Group (EuSPrIG) are the voice of best practice spreadsheet development and the management of spreadsheet risk.
Below are a couple of examples of what can go wrong from the EuSPrIG website:
C&C Group admit to mistake in revenue results
Shares in C&C fell 15 per cent after it said total revenue in the four months to end-June had not risen 3 per cent as reported, but had dropped 5 per cent. C&C said cider revenues in the UK had fallen 12 per cent, not 1 per cent, while cider revenues in Ireland were flat instead of up 7 per cent as reported last week.
C&C’s group finance director and COO said the error in last week’s announcement occurred after data were incorrectly transferred from an accounting system used for internal guidance to a spreadsheet used to produce the trading statement. “It was basically human error… there’s nothing wrong with our accounting systems,”
The FSA decided to impose a financial penalty of £5.6 million on the UK operations of Credit Suisse in respect of a breach of Principles 2 and 3 of the FSA’s Principles for Business:
- Principle 2 states that “A firm must conduct its business with due skill, care and diligence.”
- Whilst Principle 3 requires that “A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.”
More specifically, section “2.33.3. The booking structure relied upon by the UK operations of Credit Suisse for the CDO trading business was complex and overly reliant on large spreadsheets with multiple entries. This resulted in a lack of transparency and inhibited the effective supervision, risk management and control of the SCG {Structured Credit Group}”
Conclusions
Excel is, and is likely to remain, the first choice for businesses when developing financial models and analysing data. The risk that this introduces to businesses if unmanaged is real and potentially material.
What next?
In the next article we will learn how companies can manage their spreadsheet risk.
Added by Chandoo
In my brief usage of Excel, I have experienced several risky situations. Sometimes it just a mild data loss, other times, there was a potential of revenue loss or customer annoyance. Due to the economic slowdown many large and small corporations are employing spreadsheet based solutions. And if you do not understand the risk & manage it, then your risk being featured on EuSPrIG’s horror stories page.
What about you?
Do you know (or experienced) a spreadsheet horror story? Please share your ideas and best practices with us using comments.
Thank you Myles
Many thanks to Myles for writing this series. Your experience in this area is invaluable. I am really keen to learn about the best practices and adopt them in my business. If you enjoy this series, drop a note of thanks to Myles thru comments. You can also reach him at Excel Audit or his linkedin profile.
29 Responses to “Customer Service Dashboard using Excel [Dashword Week]”
Looks good, Mara. Keep up the good work!
Thx Mara, your work is great, congratulations...
wow ! Great stuff Mara !!
I am amazed on the work you did !
What I like about your dashboard
1. The first impression is the colors used. Very smart use of colors that matches each other, easy on the eye - make people wants to find out more !
2. Clear message shown for the tweetboard for Quick overview on the state of situation.
3. Use of creative titles for your charts "Information Desk".
4. Clear and uncluttered charts. Gives reader a clear perspective with good use of charts colors too.
5. Good use of Legend to describe what color meant "Highest Sales out of the three months"
6. Of course, good use of Check boxes and Slider bar to offer interactiveness on your charts.
Suggestions
1. You may want to consider formatting your Y and X axis labels to show thousands, in $500K format instead of $500,000, so you can even made your chart look much neater.
2. Budget Variant Chart - This one is special...I took a second look and try to understand it. I am not sure if this is the best chart to visualize Sales VS Budget and Variances. And the Variance of 16.19% is positive, so u may want to use conditional formatting to make it green color, red if negative.
Overall is Great Work and Great Effort !!! Keep it up and I am so proud of you !
Francis Chin
http://www.francischin.com
Great Work Maya, just wondering if "5" Scrollable list of various gift shop items, can compare the previous 2 and current month selected in the above picklist, just one more suggestion if we can use top 5 gift category by using donut and bar mix chart to show sales mix for different months
Chandoo I would like to thank you for posting such helpful tricks for creating dashboards, I have learned a lot from your KPI Dashboard demo, I have created one dashboard to compare performce of Sales Associates, thaks a lot again
Thanks for the idea! Great job! You are giving me a lot of inspiratons!
Thanks everyone for the nice comments. I'm such a novice at this so I was so grateful for Chandoo's class and for everyone who submits ideas on his blog.
Francis: Thanks so much for your comments. You're an inspiration. For the budget variance chart, I actually got that idea from one of Chandoo's post on budget vs actual. There was one that was simple and easy to read so I learned how to do that and made it dynamic. I'm open to any other ideas you have for budget vs actual. I'm always looking for ways to improve.
Sabrina: Thank you for you for your suggestion on the top 5.
Dear Mara,
Great work.
But i one suggestion regarding the INFORMATION DESK graph is consist of month but which year it belong is not there if it would be there it would be great.
Warm Regards
Bhushan Sabbani
+91 98208 26012
Thanks for this idea... Great Stuff !!
Excellent dashboard Mara.
The best I like about the dashboard is the choice of colors. They are cool and not distracting. Thanks for sharing the file.
@Chandoo
Thanks for the dashboard week Chandoo. I am learnt a lot in the last 2 days. I am excited over the next 3 days! 🙂
Regards,
Ravi.
Great work Mara ! Thanks for sharing .
Mara, I liked the line, "Need to be more helpful." Our government needs to print this line, laminate it and post it in all government offices for the staff to see.
Hi there, i have been recently visiting this blog it is really great, the best one for Excel, wish Chandoo great success ahead.
I have one query, if you protect the data sheet the chart with the checkbox gives and error saying the data is protected and cannot be modified, is there a way around. This is cause if we want to publish this to someone who should only see it and do no changes to the data, is it possible please guide.
This could be a silly but bear me i am novice to excel 🙂
Thanks.
nice work.
inspired me a lot, working on few dashboard projects...
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dear mara
looks great .any reason why you have not used the bullet chart for the actual vs target chart.on the whole it is simple and elegant .jay.
Dear Chandoo,
The word Dashboard in the heading is misspelt.
Wow. Very Nice work Mara. Next week I am going to take the Course, I will try to post my work here.
Thank you so much for your helpful blog. Always appreciated your tips and tricks.
I am proud that you belongs to our Vizag City.
The above comment, I forgot mentioned about Chandoo, those two paras is about Chandoo. 😀
Thank you Mara!
Thx Mara, your work is great, congratulations…
Great Work Mara!!!!!!!!!!!!!!!!!!!!!!!!!!
Hi Chandoo,
I had been following your blogs for tips and tricks on excel. I am working with Media agency and we collect the data. Now this data has several parameters based on several legends. For eg Class A - legend color red, classB - legend color green and so on. Class A has several characteristics and parameters and heading etc. Now everytime we gather data and make pivot then based on the data in the pilot tables - top 10 we need to insert those in charts manually and also need to change the colors of legends and also. We create nearly 300 slides every month sector wise and it takes nearly our 4-5 days in doing that. Do you have any sample dashboard which will be helpfull to us and we can create it in a day.
Thanks really amazing one,
it helped me in desgining OTACE report
Regards
Gowravan M
9980651792
Awesome Job done here .............
very good master piece but wont to know if you can design KPI's for a financial institution. Thank you
I need help to make performance for our company
we have about 10 products from 5 years old