Is Excel the most dangerous piece of software in the world?

Microsoft's calculator is partially to blame for JPMorgan losing $9bn, and a lot more besides.

Is Excel the most dangerous piece of software in the world? Baseline Scenario's James Kwak reports on a little-mentioned aspect of the notorious "London Whale" debacle at JPMorgan, where Bruno Iksil headed a proprietary trading team which made losses of up to $9bn.

It turns out, Kwak writes, that Excel was partly to blame:

To summarize: JPMorgan’s Chief Investment Office needed a new value-at-risk (VaR) model for the synthetic credit portfolio (the one that blew up)… The new model “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and pasting data from one spreadsheet to another”… After the London Whale trade blew up, the Model Review Group discovered that the model had not been automated and found several other errors. Most spectacularly,

“After subtracting the old rate from the new rate, the spreadsheet divided by their sum instead of their average, as the modeler had intended. This error likely had the effect of muting volatility by a factor of two and of lowering the VaR…”

Kwak wonders if the very ease of use that Excel offers — allowing people with no programming experience to knock together what are, in effect, relatively advanced applets — also makes it dangerous to use in most sensitive situations. There's no debug, no audit trail, and no way to test why a spreadsheet returns the value it does. Similarly, training for Excel, where it exists, tends to ignore the importance of elegant and well-designed code, leading to legacy spreadsheets being used with internal workings which are opaque to all but their original creator, who may have left the company 20 years earlier.

The problem is, though, that Excel is the worst way to run a company's software other than all the other ways. The fact that it's capable of being programmed by the people who will end up using it means that it might enable hacked-together code, but it also prevents exactly the sort of corporate bloat which leads to people circumventing their company's software in the first place.

Bill Gates threatens the world with Microsoft Office in 2003. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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UnHerd's rejection of the new isn't as groundbreaking as it seems to think

Tim Montgomerie's new venture has some promise, but it's trying to solve an old problem.

Information overload is oft-cited as one of the main drawbacks of the modern age. There is simply too much to take in, especially when it comes to news. Hourly radio bulletins, rolling news channels and the constant stream of updates available from the internet – there is just more than any one person can consume. 

Luckily Tim Montgomerie, the founder of ConservativeHome and former Times comment editor, is here to help. Montgomerie is launching UnHerd, a new media venture that promises to pull back and focus on "the important things rather than the latest things". 

According to Montgomerie the site has a "package of investment", at least some of which comes from Paul Marshall. He is co-founder of one of Europe's largest hedge funds, Marshall Wace, formerly a longstanding Lib Dem, and also one of the main backers and chair of Ark Schools, an academy chain. The money behind the project is on display in UnHerd's swish (if slightly overwhelming) site, Google ads promoting the homepage, and article commissions worth up to $5,000. The selection of articles at launch includes an entertaining piece by Lionel Shriver on being a "news-aholic", though currently most of the bylines belong to Montgomerie himself. 

Guidelines for contributors, also meant to reflect the site's "values", contain some sensible advice. This includes breaking down ideas into bullet points, thinking about who is likely to read and promote articles, and footnoting facts. 

The guidelines also suggest focusing on what people will "still want to read in six, 12 or 24 months" and that will "be of interest to someone in Cincinnati or Perth as well as Vancouver or St Petersburg and Cape Town and Edinburgh" – though it's not quite clear how one of Montgomerie's early contributions, a defence of George Osborne's editorship of the Evening Standard, quite fits that global criteria. I'm sure it has nothing to do with the full page comment piece Montgomerie got in Osborne's paper to bemoan the deficiencies of modern media on the day UnHerd launched. 

UnHerd's mascot  – a cow – has also created some confusion, compounded by another line in the writing tips describing it as "a cow, who like our target readers, tends to avoid herds and behave in unmissable ways as a result". At least Montgomerie only picked the second-most famous poster animal for herding behaviour. It could have been a sheep. In any case, the line has since disappeared from the post – suggesting the zoological inadequacy of the metaphor may have been recognised. 

There is one way in which UnHerd perfectly embodies its stated aim of avoiding the new – the idea that we need to address the frenetic nature of modern news has been around for years.

"Slow news" – a more considered approach to what's going on in the world that takes in the bigger picture – has been talked about since at least the beginning of this decade.

In fact, it's been around so long that it has become positively mainstream. That pusher of rolling coverage the BBC has been talking about using slow news to counteract fake news, and Montgomerie's old employers, the Times decided last year to move to publishing digital editions at set points during the day, rather than constantly updating as stories break. Even the Guardian – which has most enthusiastically embraced the crack-cocaine of rolling web coverage, the live blog – also publishes regular long reads taking a deep dive into a weighty subject. 

UnHerd may well find an audience particularly attuned to its approach and values. It intends to introduce paid services – an especially good idea given the perverse incentives to chase traffic that come with relying on digital advertising. The ethos it is pitching may well help persuade people to pay, and I don't doubt Montgomerie will be able to find good writers who will deal with big ideas in interesting ways. 

But the idea UnHerd is offering a groundbreaking solution to information overload is faintly ludicrous. There are plenty of ways for people to disengage from the news cycle – and plenty of sources of information and good writing that allow people to do it while staying informed. It's just that given so many opportunities to stay up to date with what has just happened, few people decide they would rather not know.