9 Common Spreadsheet Risks and How to Avoid Them


Ian CleaverVP Product and Professional Services at ClusterSeven

Thursday, August 8, 2019

It all begins by simply hitting the wrong key while typing. An innocent mistake such as this can have serious implications for companies that don’t have adequate procedures in place to protect their spreadsheets and data.

Article 4 Minutes
9 Common Spreadsheet Risks and How to Avoid Them

One of the most common office tools for decades, the spreadsheet has continued to evolve alongside emerging technologies. With this evolution, the way that employees use spreadsheets has also adapted. What once was a relatively straightforward way to keep records, has developed into a tool for complex analysis and as a way to present data in various formats. The downside to these increased capabilities is that the complexity creates a higher risk of errors.

In the article below, we will outline some of the most common spreadsheet risks and how they can be avoided.

1. Lack of training

Employees that don’t have the appropriate training required to build accurate spreadsheets are often given spreadsheet task. Not giving employees proper training will foster an environment where bad spreadsheets are made with poor referencing and inaccurate formulas. Training can empower employees with the skillset to understand risk management and how to model a spreadsheet effectively. This will refine the spreadsheets and reduce the amount of errors.

2. Open-ended computer systems

If the software being used is accessible to anyone and they can all make edits, it’s difficult to prevent untrained employees from making accidental mistakes while analyzing the data. This can be overcome by utilizing a closed computer system. This limits who can access the spreadsheets and edit them, reducing the risk of certain errors.

3. Not checking the initial spreadsheet build

This may seem like an obvious point to make, but verifying that the sheet has been built accurately is one of the biggest ways to reduce risk of error. Consider implementing a peer evaluation of spreadsheets before they make it into the final stages and are used throughout the organization for data analysis.

4. Unclear headings

With unclear headings for rows and columns, it can be difficult for users to properly comprehend the information within and report on it inaccurately. By placing clear understandable headers onto the rows and columns, this risk is minimized.

5. Unnecessarily Complex Formulas

Sometimes formulas can be made even more complex than they have to be. This increases the difficulty to update them and track exactly what functions they’re fulfilling. Where possible, divide the calculations into clear steps. This makes it easier to notice inconsistencies when checking the work.

6. Not providing creators with guidelines

Without a set of rules and expectations for how users should be building and preparing their spreadsheets, errors will become more common. This increase in mistakes is because there’s no consistency amongst the various spreadsheets created by multiple people within the organization. To combat this, an organization should create a set of rules on how a spreadsheet should be styled, what content is accessible and what the accountability is around policies and procedures.

7. Reusing spreadsheets

It’s not uncommon for a spreadsheet to take multiple forms within its lifetime. In thinking they’re saving time, users will cut and paste data. However, doing this may mean the spreadsheet doesn’t work in the way it was first intended to. Formulas can get changed and overwritten and links can be destroyed. It might seem to be saving time, but in the long run it’s easier to create a spreadsheet from scratch.

8. No data backups

The information within your spreadsheets may be confidential. Consider the implication if you lost that information and what the result of this would be. You can overcome data loss by ensuring that you have an efficient backup strategy. Make sure users regularly save and backup their data sheets in secondary locations.

9. Fraud

While not a topic that many businesses want to envisage from their employees, it is, unfortunately, a reality that they must face. Spreadsheet fraud has led to the closure of multiple businesses throughout the years. To combat this issue, it’s important that end-users and employees are aware of the signs of potentially fraudulent activities. For example, false values can be used in place of actual figures.

Understanding spreadsheets can cause significant risk to a company is vital to ensuring an effective, efficient model is created. Inaccurate data can lead to multiple issues, from strategic and economic to legislative and law-breaking. By following some of the steps we have outlined above, and investing in End User Computing technology, you’ll be able to reduce the risk of these issues within your company.

Ian Cleaver

Ian joined ClusterSeven in 2012 and is responsible for the Professional Services Organisation, overseeing client service levels and delivering excellence across the support programmes for customers including pre-sales support and implementation services. Prior to Joining ClusterSeven, Ian held a number of senior roles most recently in Financial services at HSBC and RBC.


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