Excel blamed for multibillion dollar financial losses.
Interesting article in the New Statesman about the dangers of Excel, highlighting some of the problems with Excel workbooks, particularly it would seem the difficulty of validating them and the poor review processes that the products ubiquity and apparent simplicity can engender ...
http://www.newstatesman.com/technology/2013/02/excel-most-dangerous-piece-software-world
Base article ...
http://baselinescenario.com/2013/02/09/the-importance-of-excel/
The issue is described in the appendix to JPMorgan’s internal investigative task force’s report. 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) and assigned a quantitative whiz (“a London-based quantitative expert, mathematician and model developer” who previously worked at a company that built analytical models) to create it. 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.” The internal Model Review Group identified this problem as well as a few others, but approved the model, while saying that it should be automated and another significant flaw should be fixed.** 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 . . .”
Discussion ...
http://news.ycombinator.com/item?id=5198187
Some of these factors have raised their heads in Mathcad discussions, particularly the cutting and pasting of data and equations (often in the context of symbolic evaluations). It also supports the argument that Mathcad's greater transparency encourages better quality reviews whilst still providing the ease of use that makes Excel so popular (along with the fact that "everybody" has it!)