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11th January 2012

Only 20% of actuaries and insurance finance managers completely confident in data control processes and spreadsheets says research

Only one in five (20%) actuaries and insurance finance professionals are completely confident of their firm’s data control processes and the supervision of their large estates of business-critical spreadsheets. Two in five respondents (40%) stated that corporate controls around spreadsheet access could be improved and over one in ten (13%) warned they are simply not confident at all about the oversight process behind spreadsheets.
According to the research by ClusterSeven, an international provider of software to manage unstructured financial data, only 28% say that there is full and sufficient documentation in place for others to manage their spreadsheets in case of their absence. Indeed, over half (53%) believe that a qualified actuary or similar specialist would have to rely on their skills and experience as the documentation process is not sufficient. Most critically, 19% warned that a qualified actuary would probably have to rebuild spreadsheets given a lack of basic continuity protocols.
The study highlights how exposed modern financial institutions have become to data risks as demands placed on their spreadsheet-based systems have expanded.
In particular, the processes currently in place to protect and support best-practice spreadsheet management remain far from watertight. Asked how many people have the ability to make changes to spreadsheets or those that feed data into them, nearly half (46%) of respondents to the survey said that between four and 10+ people could change their critical spreadsheets. Some 12% did not know how many people in their organisation have access to business-critical spreadsheets.
The survey found that 49% of respondents use spreadsheets more than any other software application for modelling, data management and reporting activities, including 9% that solely use spreadsheets for these activities. Only 16% of respondents said they either did not use spreadsheets at all, or less than other applications–meaning that 84% of the insurance risk management analysis supporting pensions and policies are significantly or entirely dependent on spreadsheets.
Ralph Baxter, ceo of ClusterSeven, said “A core thrust of the research was to calculate how exposed respondents felt they and their companies were to spreadsheet risks and the overall transparency and accessibility of their data management systems. Actuaries hold the keys to excellence in data management and the spreadsheets that underpin data processes. Here, the survey indicated that people had real concerns about the inability of other qualified individuals to understand their company’s spreadsheets and the lack of standardisation of data management.
“Overall one in five respondents rated spreadsheet risk very serious while a further 31% put it as fairly serious. This is a stark indication of just how important this issue has now become to the insurance profession.”