If you work in compensation planning, you may think, how much damage can one spreadsheet do?
In 2012, JP Morgan Chase lost $6 billion–that’s billion with a B–in the “London Whale Disaster. It had a complex model called the Synthetic Credit Portfolio Value at Risk (VaR) Model that was manually updated in Excel. Someone made an error, and that error was repeated, ultimately resulting in huge losses.
In 2020, a UK contact tracing program left off 15,841 positive Covid cases. Why? Because no one realized Excel has a limited number of rows and additional cases didn’t get added on.
In 2024, officials in Japan’s Aomori Prefecture discovered lost tax revenue of 790 million yen (approximately $5.4 million), which they had to recalculate and contact thousands of taxpayers about. This was caused by someone making an Excel reference error.
The problem with spreadsheets
Excel isn’t evil. It’s just not built for critical, high-stakes processes, including compensation planning.
To keep reading, click here: The $6 Billion Risk: Why Compensation Planning Doesn’t Belong in a Spreadsheet
