Most people think of spreadsheets as a free tool because they pay little to nothing for it. But the purchase price of Excel or other spreadsheet tools is just the beginning of the costs your institution will incur if it’s using spreadsheets to oversee risk management or compliance.
As regulators have written more enterprise risk management (ERM) and compliance guidance, financial institutions (FIs) have responded by dedicating more and more staff to actively managing and executing these functions. But few FIs have invested in tools to ensure that the time and energy spent is properly harnessed to maximize efficiency and return on investment.
That leaves many FIs relying on spreadsheets, exposing them to flaws that can end up costing big bucks.
Here are five hidden ways spreadsheets add costs:
Homegrown record-keeping. A new spreadsheet is literally a blank page. Before a single word is recorded, your staff has to analyze pages of guidance to determine what information needs to be recorded. Then it has to build a monster spreadsheet to keep track of it all, making sure nothing is left out and that all equations and pages are accurate.
Manual processes. Want to know who did what and when? You better hope each person remembered to do it and then remembered to update the spreadsheet. You’ll also have to toggle between worksheets and narrative documents, scrolling and searching. Users must cut and paste information from one data source to another. The whole process is labor intensive and prone to errors in both data entry and analysis. There are no auto reminders, audit trails or automated reports. Nor is there any assurance that there aren’t multiple versions of the document floating around.
Examination headaches. The harder it is to pull information for the examiners, the more your costs go up. Lengthy exams are costly as valuable employees are pulled away from their regular jobs. You can give examiners access to your spreadsheets, but good luck explaining your system to them.
Duplication and silos. When it comes to risk management and compliance, everything is connected. GBLA, BSA, vendor management and your own institution internal policies are all interrelated. Multiply that across all your locations and business divisions, and spreadsheets just aren’t up to the task. They just can’t effectively integrate all that information.
Mistakes and lost opportunities. Spreadsheets rely on individuals to analyze and synthesize the data. It’s inefficient and leads to inaccuracies, adding layers of confusion. There’s limited transparency and no way to integrate data, meaning your FI lacks an enterprise-level view of risks, costs and opportunities.
Is your institution eking by with spreadsheets? Think about the hidden costs and weight them against the cost of software to automate your processes. The savings will be obvious. Learn about Ncontracts solutions and let us help you enjoy the upside of risk.