Many banks and financial institutions use Excel across financial reporting, operational controls and risk management mainly because it is a simple, convenient and agile tool available on every business user’s desktop. However, the use of Excel does introduce operational risks which regulators have looked to address with legislation such as Sarbanes-Oxley Act (SOX); BCBS239 and Basel III. To meet the regulatory requirements many banks approach is to catalogue all critical spreadsheets and the controls around them.
Firms using Schematiq with Excel can materially reduce their operational risk.
Data integrity: Spreadsheets are prone to errors, leading to incorrect financial reports and risk assessments.
When using Excel with Schematiq, data can be easily accessed from an enterprise’s data sources without memory or range limitations and no VBA. Schematiq’s design patterns for Excel allow data to be pushed from worksheets into databases and easily be retrieved, allowing a banks enterprise data policy to be applied, massively reducing the opportunity for data corruption with Excel no longer a data endpoint.
Model errors: Spreadsheet models can be difficult to understand and maintain, leading to model failure and incorrect risk assessments.
Schematiq allows user-defined functions so models can be easily componentized. The Schematiq table functions allow functions to be applied to tables of millions of rows without having to range-copy the formula millions of times, therefore massively reducing sheet size and complexity and making them easier to document and understand. The Schematiq testing framework allows the definition of regression tests to run every time a sheet is changed and highlights any unexpected errors.
Lack of control: There is a lack of standardization and control over Excel models, leading to inconsistent and unreliable risk assessments.
Schematiq introduces version control, testing and governance for an organisation’s spreadsheets. The industry standard repository Git is used to version control sheets and Schematiq Workbook manager allows the definition of functions and tests to ensure that sheets continue to run as intended.
Inadequate documentation: Excel models often lack proper documentation, making it difficult to understand the underlying logic and assumptions, and increasing the risk of model failure.
Schematiq design patterns and table functions reduce complexity making worksheets easy to document and audit. Using these patterns workbooks are smaller and easier to understand reducing the opportunity for error. Schematiq can eliminate VBA in most spreadsheets.
Model replication: Excel models are often built and maintained by individual users, making it difficult to replicate and validate results across teams and departments.
Schematiq design patterns allow Excel functions to be defined and shared as API or stored functions making it easy to componentize spreadsheets and reuse logic in a controlled way.
Security: Excel spreadsheets are vulnerable to data breaches and cyber-attacks, as there is a lack of built-in security features to protect sensitive financial data.
Schematiq design patterns for Excel push data from worksheets to databases allowing a banks enterprise data policy to be applied, massively reducing the opportunity for data corruption. The Schematiq governance framework allows only those who need to have access to a spreadsheet and presenting Excel logic as an API gives tight control of the version of a Function or model that is shared with other systems or other Schematiq/Excel users.
Compliance risk: Excel models may not meet regulatory requirements, leading to fines and other penalties.
All models have compliance risk, using Schematiq, business users can create models with the tool they are familiar with, test those models and convert them automatically into code that can run in the cloud in a controlled and well-governed manner.
Inadequate risk management: Excel models may not have adequate risk management controls in place, leading to increased risk of financial loss.
Schematiq introduces version control testing and governance for an organisation’s spreadsheets. User access rights can be set at a project workbook or function level. All the cloud assets produce a full audit trail when run.
If you want to significantly reduce operational risk whilst increasing agility and getting faster answers, reach out to Schematiq today: hello@schematiq.com