Microsoft Excel is a spreadsheet developed by Microsoft which is around for almost 35 years and is used by almost all companies in the world. Although excel is a powerful software, it comes with drawbacks and may not be the right tool for your risk management.

Microsoft Excel is a spreadsheet developed by Microsoft which is around for almost 35 years and is used by almost all companies in the world.
Excel is mainly used for data collection, calculations, and reporting. It is flexible and easy to use at “first sight”. Although excel is a powerful software, it comes with drawbacks and may not be the right tool for your risk management. It is open to human errors and have other issues that may impact your work.
• Data, Format, Formula Errors: Flexibility comes with a price. As excel accepts all type of data it is easy to make errors when data is entered.
A minus sign missing in your expense column, having 1 more or 1 less zero in your revenue numbers is not uncommon. When you enter a date info, are you sure that is it 1st of February? Can it be 2nd of January? Is comma used as decimal point or thousand separator?
When you write your formula, are you sure that you input all the columns needed for your calculation? Or when data and formulas are copy-pasted, are they in the right place and taking input from right columns for calculations?

• Data Quality and Integrity: As mentioned before, excel accepts any type of data. Name info can be entered under salary or birth date can be entered for loan application date. When data is copy-pasted, are you sure all data went to right place?
How are you going to be sure that the data quality you use is sufficient for your work? Another thing to consider is the integrity of data. Assume you are working on loan information with related installments. Is your installments worksheet have correct amount of data according to your loan details?

• Scalability: Excel has its own limitations, ~1M rows and much less in earlier versions. How big is your data? Are you using heavy computations in your calculations? Excel may struggle with large files especially when doing re-calculations.

• Version / Access Control, Auditability: Different users may need to work on same excel and users may create local copies while working. It may lead to errors/overwrites when combining the work. Having a one true source of data may be much more difficult to maintain.
In addition, excel is poor in auditability where you can track what changed and by who.

These types of issues when using excel can create re-work, unnoticed (hopefully noticed) errors. Benchmarks suggests that excel errors is much common than anticipated and many companies experience errors in excel usage which may lead to financial loss, wrong business decisions, operational impacts, and even reputational loss.