JP Morgan lost over $6 billion in 2012 in the so-called “London Whale” incident, largely because of spreadsheet errors. While working on a Value at Risk model, an employee copied and pasted data or formulas from one spreadsheet to another. But embedded errors were not reviewed and the calculations never tested. Reportedly some figures were divided instead of averaged, and there were other mathematical errors as well.
During the banking crisis in 2008, Barclays agreed to purchase Lehman Brothers, except spreadsheet errors led them to eat losses on contracts they did not intend to buy. The detailed spreadsheet of Lehman assets contained approximately 1,000 rows that needed to be converted into a PDF. Except, the original Excel version had hidden rows with 179 items that Barclays did not want. The notes that they did not want those contracts were not transferred to the PDF, but the hidden rows were. As a result, they had to buy 179 contracts that they did not want.
While Enron’s spreadsheet discrepancies were largely deliberate and cultural, the organizing committee for the 2012 London Olympics had a major embarrassment and problem because of a simple typo in a spreadsheet. They sold 20,000 tickets for synchronized swimming, but there was a single digit that was incorrect. There were only 10,000 tickets available. Months after they had sold twice the available seats, the organizing committee had to apologize and try to get spectators to instead accept tickets for other events.
The 2001 implosion of energy giant Enron has been studied widely and led to Sarbanes-Oxley and other regulatory changes. Yes, there were ethical problems at Enron, but they started with and were exacerbated by thousands of inaccurate spreadsheets that were not caught by auditors. By some estimates detailed in legal proceedings, 24 percent of spreadsheet formulas used by Enron contained mistakes (whether deliberate or accidental). For example, the company built power plants and other assets, then claimed projected profits right away before any profits could realistically be achieved. Then, if the revenue was lower, Enron did not take the loss; they transferred the assets to another corporation so the reductions went unreported and didn’t hurt results for the corporation.