Spreadsheet Risks in Banks

No other industry perhaps handles such large volumes of critical financial data more than the banking industry. For decades now, spreadsheets have become permanent fixtures in the front-line reporting tool sets of banks, providing organised information when and where needed.

But as banks enter into a period of heightened credit risks, elevated levels of fraud, and greater regulatory scrutiny, many are wondering if continued reliance on spreadsheets is a wise decision for banks today.

The downfall of Lehman Brothers which eventually led to its filing for Chapter 11 bankruptcy protection on September 15, 2008, served as a wake up call for many institutions across the globe to make a serious examination of their own risk management practices. But would these reforms include evaluating the security of user developed applications (UDAs), the most common of which are spreadsheets, and putting specific guidelines as to when they can – or cannot be – used?

Banks and Spreadsheet Use

Banks have been known to utilise spreadsheets systems for many critical functions because most personnel are well-acquainted with them, and the freedom of being able to develop customised reports without needing to consult with the IT department offers flexibility and convenience. In fact, more than having a way to do financial budgeting and analysing customer profitability, even loan officers and trade managers have become reliant on spreadsheets for risk management reporting and for making underwriting decisions.

But there are more than a few drawbacks to using spreadsheets for these tasks, and the sooner bank executives realise these, the sooner they can adopt better solutions.

General Limitations

Spreadsheets are far from being data base systems and yet more often than not, they are expected to act as such, with figures constantly added and formulas edited to produce the presumably right set of reports.

In addition, data integrity is always a cause for concern as most values in spreadsheets are entered as manual inputs. Even the mere misplacement of a comma or a negative sign, or an inadvertent ?edit? to a formula can also be a source of significant changes in the outcome.

Confidentiality risk is also another drawback of the use of spreadsheets in banks as these tools do not have adequate?access controls to limit access to only authorised individuals. Pertinent financial information that fall into the wrong hands can lead to a whole new set of problems including the possibility of fraud.

Risks in Trading

For trading transactions, spreadsheets can prove to be of immense use – but only for small market volumes. As trade volumes increase and the types vary, spreadsheets are no longer a viable solution and may likely become more of a hindrance, with calculations taking longer in the face of bigger transaction amounts and growing transaction data.

And in trading, there is always the need for rigorous computational functions. Computing for the Value at Risk (VaR) for large portfolios for instance, is simply way beyond the capabilities of spreadsheets. Banks that persist in using them are increasing the risk of loss on those portfolios. Or, they can be opening up?opportunities for fraud?as Allied Irish Bank (in the case of John Rusnak – $690 million) learned the hard way.

Risks in Underwriting

Bankers who use spreadsheets as their main source of information for underwriting procedures also face certain limitations. Loan transactions require that borrowers? financial data be centralised and easily accessible to risk officers and lending officers involved in making decisions. With spreadsheets, there is no simple and secure way of doing that. Information can be pulled from different sources – individual tax returns, corporate tax documents, partnership documents, audited financial statements – hence there is difficulty in verifying that these reports adhere to underwriting policies.

Spreadsheet control and monitoring

Financial institutions which are having difficulty weaning themselves from the convenience and simplicity that spreadsheets offer are looking for possible control solutions. Essentially, they want to find ways that allow them to continue using these UDAs and yet somehow eliminate the?spreadsheet risks?and limitations involved.

Still, the debate goes back and forth on whether adequate control measures can be implemented on spreadsheets so that that the risks are mitigated. Many services have come forward to herald innovative solutions for better spreadsheet management. But at the end of the day, there really is no guarantee that such solutions would suffice.

More Spreadsheet Blogs


Spreadsheet Risks in Banks


Top 10 Disadvantages of Spreadsheets


Disadvantages of Spreadsheets – obstacles to compliance in the Healthcare Industry


How Internal Auditors can win the War against Spreadsheet Fraud


Spreadsheet Reporting – No Room in your company in an age of Business Intelligence


Still looking for a Way to Consolidate Excel Spreadsheets?


Disadvantages of Spreadsheets


Spreadsheet woes – ill equipped for an Agile Business Environment


Spreadsheet Fraud


Spreadsheet Woes – Limited features for easy adoption of a control framework


Spreadsheet woes – Burden in SOX Compliance and other Regulations


Spreadsheet Risk Issues


Server Application Solutions – Don’t let Spreadsheets hold your Business back


Why Spreadsheets can send the pillars of Solvency II crashing down

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How to carry out an Operational Review

A mobile workforce management software is key to managing an efficient field workforce.? Managing a staff of people can be tricky in any industry. Try keeping track of employees on shifting jobsites, many whom are paid hourly or temporary workers. The added pressure of ensuring the right workers get to the right sites at the right times, but they also need to track hours, parts used, vehicles and equipment assets.

In a previous post, we defined what is an operational review and why they play a key process in the continual evolution of successful businesses.?

Operational reviews allow the organization members to evaluate their performance, according to the procedures, resources properly, timescales and budgets.

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In this post, we’ll take a closer look at how to implement an operational review and the steps typically undertaken to help you and your organisation to implement an operational review.

What the steps in a Operational Review Process

There are typically six steps in an operational review that range from preparatory work conducting interviews and collecting documents to the presentation of the final written report.

An audit should be customized to meet a organisatons specific needs, so standard steps can and should only serve as a guideline.? Management and internal and external auditors should adjust the process to address the company’s particular goals and objectives.

Initial Management Meeting

Understanding the problem is the first crucial step of an operational review. This is one of major areas of discussions when the audit team meets with the management, and department heads will be asked to identify any specific areas of concern. Once the problem is identified, it would be easier to come up with workable solutions.

Conduct Interviews

The next step in the evaluation is carried out with experienced teams doing interviews and keeping close observation. Each team essentially watches how employees carry out their responsibilities. This is considered a key part of the process.

When doing the interview, it is also vital that the observing team gains the employees? trust and confidence. Likewise, the staff must be assured that whatever transpires between the team and the employee will be kept confidential. Management must therefore guarantee anonymity to anyone who offers critical information, lest employees withhold vital information and render the data gathered inaccurate.

Systems Review

Employees and management practices will be reviewed by the assessing team according to the standard policies and guidelines of the company. The effectiveness of the controls in place as well as their appropriateness to the current operating conditions will also be evaluated.

Reporting

A documentation of the data gathered and the assessment of the evaluating team, will be submitted to the management after the review process. Flow charts and written narratives of departmental activities are usually part of this report. This is also where observations and recommendations of the team will be presented to the department heads concerned.

Review Results

While the operational review is being conducted, it is important to take into account the vital factors that affect the company: the people, processes, procedures, and strategies. These four factors can determine the company?s progress in the future.

Key Areas of focus in operation reviews

At a minimum an operational review should include the following key ares of assessment

Management Control

Responsibilities, authority, and the scope in which an employee has the freedom to act must be clearly defined and documented. A complete and specific job description for instance, would give the employee a clear perspective on how he acts and functions within the company.

Boundaries should be set not only to benefit the employer but more so the employee as well.

Moral and Ethical Guidelines

Moral and ethical guidelines are just as important to ensure for a smoother employer?employee relationship. Otherwise, personal issues such as work ethics, work attitude and personal values may post problems in the long run if such guidelines are not drawn properly before relationships are established.

Processes and procedures

Evaluating processes is only beneficial if the company itself updates its processes and procedural manuals regularly, or at least when needed. Such protocols may need revision and some steps may be obsolete already. Improving a company?s processes and procedures doesn’t always entail cost. In fact, improvised procedures may even be cost-effective and could make the processes more manageable.

Communication and reporting standards

Gaps in communication could result in serious lapses in internal controls, putting the company and/or its assets at risk. This is where the importance of timely and clear communication comes in. Likewise, reports must be useful, and the flow of information and how it is processed must keep pace with the company?s growth.

Information technology (IT) and security controls can also be included under the communication clause. Proper IT security policies must be in place, state-of-the-art protection techniques employed, and everything be documented, periodically updated, and continually monitored.

Strategic planning and tactics

No company can ever be complete without its strategies. It would unwise for any organization to proceed without first knowing where it stands and what direction it wants to take. Strategic planning draws such a map. It must be aligned to the mission and vision of the company, and should also coincide with the organizational goals set. Strategic planning deals with these three key questions:

  • What do we do now
  • Whom do we do it for?
  • How can we overcome competition

Without clear strategic direction, expectations would likely differ between ownership and management.

Contingency planning, testing and recovery

Contingency plans must be up-to-date, and are essential to the organization. If one course of action fails, the company should have plan B, C and so on. In addition, an organization should be prepared to respond to interference’s.

This includes establishing a formal process to review transactions processing during both disruption and recovery.

Presentation of Report

Based on your objectives and our findings, we will develop detailed recommendations to improve your company?s performance and productivity. Our written report will include a list of both short-term and long-term projected improvements and courses of action, to be mutually agreed upon by both parties.

To ensure the achievement of the improvements we outlined, our team will also assist in the implementation of these modifications.

The plan has three levels of recommendations: one for executives, another for management, and a third one for staff.

The executive summary concentrates on your company?s strengths, weaknesses, opportunities and threats to its entirety. It includes recommendations for any needed changes in policy or governance.

The management plan is based on employee feedback and includes areas of immediate improvement as well as identification of potential problem areas. Concerns from the bottom level management can now be forwarded to the top level management in formal writing. Better working relationships may evolve from this, thereby setting the work environment for a higher productivity ratio.

Lastly, the staff report deals with topics like charting the hierarchy of the organization, and discussing in detail specific control objectives that are critical to the company?s mission. Part of our goal is to encourage personnel to pay close attentions to such changes, if any, as these efforts are essential if they want to bring about both organizational and personal success.

If you would like to further discuss how our operational review services can benefit your company, please feel free to contact us at your convenience to schedule an initial consultation. We?ll be more than happy to assist you.

More Operational Review Blogs


Carrying out an Operational Review


Operational Reviews


Operational Efficiency Initiatives


Operational Review Defined

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Proactive Preventative Maintenance: How IoT and Field Service Management Software Helps

FieldElite, our mobile workforce management software, has been key to several industries? return on investment. Whether it’s for plumbing, electrical, property management, cleaning, and maintenance, FieldElite has provided data centralisation for efficient management of these business activities. 

Field service management software is important to utilise current workload, and also helps resolve future issues. We’re talking about a proactive approach to preventative maintenance. 

How exactly do field service managements help in preventative maintenance? 

The answer lies in how field service management is interlinked with IoT in predicting future jobs for the mobile service industry.  

What is IoT? 

Simply put, the Internet of Things (IoT) is a network of devices and sensors connected to the internet. These ?things? (e.g. your smartphone or smartwatch) enable data to be sent and be received without human intervention.

Fundamentally, IoT is about devices being connected to the internet to allow remote monitoring. 

For many years now, remote monitoring for IT infrastructure has been widely used. 

What’s new that we’re experiencing right now is even the smallest devices ? individual light bulbs and sensors ? can have a network and internet connection, allowing entire systems to be monitored in great detail. 

Implementing IoT and accessing data can be challenging for most service organisations. However, when combined with predictive analytics and field management software, it can have a huge potential impact on individual businesses and the service industry as a whole. 

What is Preventative Maintenance? 

Preventive maintenance refers to regular, routine maintenance to help keep equipment up and running, preventing any unplanned downtime and expensive costs from unanticipated equipment failure. 

The goal of preventative maintenance is to decrease the likelihood of a machine or an equipment’s failure by performing regular maintenance. 

Preventative management can be very complex, especially for companies with a fleet of equipment or customers. It requires careful planning and scheduling of maintenance on equipment before there is an actual problem. 

Also, preventive maintenance is evolving. It’s not just about scheduling the same work every month to prevent failure anymore. Today, working smarter with better information about equipment conditions is critical to ensure maintenance is effective.

That’s where IoT and field service management software, like FieldElite, comes in. Together, they organise and carry out preventive maintenance needs for service industries. 

How IoT and FieldElite Helps in Preventative Maintenance

With FieldElite and IoT technology, you get the best in preventive maintenance management.

  • Evaluation of equipment or machines ? the condition of machines or equipment is evaluated in order to predict when maintenance needs to be performed. 
  • Automated work order ? automated time-based work order creation
  • Full condition-based plans allows you to do the following:
    • Right-size your maintenance work
    • Lower costs
    • Extend the life of your or customer?s assets 
  • Quicker reporting ? due to its efficient and automated nature, IoT and field service management software can reduce a field technician?s average report time from two weeks to two days, therefore boosting your cash flow! 

That’s the most important result a mobile service management software can produce (in connection with preventative maintenance). It’s cost-saving! This can be achieved over routine or time-based preventive maintenance, as tasks are only performed when they are needed. 

The Internet of Things (IoT) and field service management software is changing field service as we know it. 

Companies who adapt and utilise these technologies will benefit the most from the resulting competitive advantage of preventative maintenance. 

Start elevating every field service experience now!  

Our field service software, FieldElite helps you: 
  • Accepts jobs in the field
  • Automate appointment scheduling
  • Manage scheduled jobs 
  • Get real-time visibility into all operations
  • Have a clear and easy viewing of job locations 
  • Resolve field service calls faster 
  • Enable mobile workers to get the job done right
  • Keep customers updated at every step 
  • Create quotations and accept payments 
  • Analyse efficient reports from field technicians
  • Helps in proper preventative maintenance management. 

Learn how to schedule jobs to field workers with ease. Check out FieldElite! 

CONTACT US

  • We seek to understand your technology and business challenges
  • We tailor a demonstration of our platform and solutions to align to your specific needs
  • We answer any questions and make sensible recommendations
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Energy efficiency demystified

Energy bills are all about Energy efficiency but energy efficiency management is not all about bills. Energy efficiency means reducing carbon emissions, lowering energy costs and improving the quality of life. Energy efficiency is therefore about conservation of energy in a broader perspective; in fact energy efficiency is almost becoming a moral obligation.

Through adoption of appropriate energy efficiency measures, companies can significantly bring down the overhead costs making hundreds of dollars in savings. Energy efficiency is also synonymous with a better quality of life. Taking appropriate measures to ensure proper insulation protects your premises against extreme weather conditions leading to more productivity and an improvement in the bottom line.

Improved energy efficiency means a smaller amount of carbon emissions, less pollution and a better environment.

It is now easier than ever to visually identify where your facility is wasting energy, how much energy is being wasted while tracking the progress made in reducing energy consumption by turning that detailed, raw energy-consumption data into useful charts and figures.

Having visibility of your Energy usage gives you knowledge of what power you are consuming. This helps you change energy usage behaviours and this can have significant savings and reduction in your electricity bills. Real-time electricity consumption tracking is enough prodding for you to be on the lookout for inefficient energy consumption unit’s e.g.? Heating and cooling equipment, ducts insulation of your premises or a failure of one of these components to perform as intended. Pin-pointing the problem areas is not a walk in the park but fixing it can make your building more energy-efficient and comfortable.

A wide range of solutions are now available for charting and analysing energy consumption that helps energy managers, facilities managers, energy consultants and building-services engineers. These will not only offer advice but will enable you provide tailor made solutions for your organisation by assisting you in developing a sustainable energy strategy. Our energy monitoring software is one example.?

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