Politics 11 February 2013 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. Sign up for our weekly email * Print HTML 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. › What we'll mostly miss about Pope Benedict XVI is . . . his hats 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. Subscribe More Related articles 1q2w3e4r: Do you have one of the most common passwords of 2016? Living the Meme: What happened to the Ermahgerd girl? Why doesn't falling snow show up on your phone camera?