In the face of increasing automation in the energy trading world, spreadsheets have been singled out by some as old-fashioned and outdated. While a growing number of energy traders are moving on to more sophisticated trading systems, this overly simplistic analysis ignores some of the notable benefits of spreadsheets. Stuart Cook of Baringa Partners says that rather than demonising spreadsheets, businesses need to be clear on when it's right -- and when it's wrong -- to use them.
Anyone who works with spreadsheets knows that it's all too easy for errors to creep in. Most are due to negligence, but some are due to fraud. In 2002, rogue trader John Rusnak's fraudulent manipulation of spreadsheets lost his employer, Allfirst Bank, US$691 million. Through his unauthorised currency trading, Rusnak adjusted the inputs into the calculation of value-at-risk. Instead of manually checking the figures, Rusnak's colleague trusted a spreadsheet that drew data from Rusnak's personal computer. That data was based on figures relating to fictional transactions, enabling Rusnak's fraud to go undetected for some time.
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