From reading the London Whale article it really showed me
the importance of using excel correctly even when under pressure. A London based
quant was creating a new Value at Risk model which was not tested correctly and
suffered from simple Excel errors. On top of that during the review process
more operational issues were found and nothing was done to fix the problem.
It was believed that the Model Review Group faced some pressure to product a
final product and accelerated the models review. The model predicted a lower volatility than
it should have been, which can be traced back to how Excel was used in this
project. The flaw that got overlooked cost JP Morgan a $6 billion in trading losses
and it all comes back to how excel was used. I see the importance of being
thorough when imputing numbers and equations into excel as a small mistake can
cause big consequences.