Do you know the risks of relying on spreadsheets?
Written by Aspect Enterprise Solutions
As business complexities compound, commodity trading companies can no longer rely on spreadsheets
Believe it or not, 90 percent of commodity trading companies still use spreadsheets in some portion of their trading activities. Adding to this, 68 percent of commodity trading companies know of at least one incident where a spreadsheet created operational or financial issues for their company.
Countless statistics detail the overwhelming number of errors found in spreadsheets and the financial disasters they have caused trading companies. Yet, companies still use spreadsheets — even when there is now an affordable alternative in Aspect’s cloud commodity trade and risk management (CTRM) software.
Here’s just one alarming financial loss that made headlines:
JPMorgan Chase incurred $6 billion in trading losses due to a spreadsheet error that led the company to misstate VaR presented by their model’s trades. There are dozens more stories just like this one, including 2 more that resulted in the billions in losses revealed in the attached infographic.
The dangers of spreadsheets
Learn from the major companies that fell prey to the risks of spreadsheets. For forward-looking commodity businesses to thrive and remain competitive in volatile markets, relying on spreadsheets just isn’t an option.
Here are 5 reasons why:
Reason #1: Risk of inaccuracies
Spreadsheets are full of inaccuracies.
Reason #2: Risks to shareholder value
Spreadsheets could put your regulatory compliance at risk.
Reason #3: Risks to productivity
Spreadsheets are time-consuming, unwieldy and can’t scale.
Reason #4: Risk of decision profitability
Spreadsheets don’t ensure you get the most out of your decisions.
Reason #5: Risk of losing proprietary analytics knowledge
Quantitative analysts may control your spreadsheets. What if they leave your company?
Remove spreadsheet risks with Aspect CTRM software
In the business of trading energy and commodities, companies face risk in many different forms, including counterparty credit risk, liquidity risk, market risk, and operational risk, just to name a few. Organizations need a clear understanding of what they’re up against and the tools to develop strategies to effectively mitigate these risks. Replacing spreadsheets with an integrated software system offers extensive benefits in managing these risks.
With Aspect, smaller trading companies gain access to the same professional trade and risk management tools as larger companies. There’s no longer a reason to rely on risk-prone spreadsheets that can derail your business. Because there is no software or hardware to install with cloud software, the costs are lower, saving you money on software, infrastructure, maintenance, and support.
Infographic: 5 Reasons Spreadsheets Put Your Company At Risk
Discover how Aspect can help you avoid millions in losses, and why professional trading and risk management tools are no longer out of reach for small to mid-size trading companies.
Do you want to learn even more about the benefits of software vs. spreadsheets, including the 5 things spreadsheets can’t do that a professional CTRM software solution can?
Spreadsheets in Commodity Trading. Commodity Technology Advisory LLC. Feb. 6, 2015.
The Use of Spreadsheets in Commodity Trading – 2015. Commodity Technology Advisory LLC. 2015.
Linette Lopez. How the London Whale Debacle Is Partly the Result of an Error Using Excel. Business Insider. Feb. 12, 2013.