Robert Kugel's Analyst Perspectives

The Spreadsheet and the Whale

Posted by Robert Kugel on Jan 29, 2013 9:06:31 AM

Banking giant JP Morgan raised eyebrows in 2012 when it revealed that it had lost a substantial amount of money because of poorly conceived trades it had made for its own account. The losses raised questions about the adequacy of its internal controls, and broader questions about the need for regulations to reduce systemic risk to the banking system. At the heart of the matter were the transactions made by “the London Whale,” the name given to a JP Morgan’s trading operation in the City by its counterparties because of the outsized bets it was making. Until that point, JP Morgan’s Central Investment Office had been profitable and apparently well controlled. In the wake of a discovery of the large losses racked up by “the Whale,” JP Morgan launched an internal investigation into how it happened, and released the findings of the task force established to review the losses and their causes [PDF document].

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Topics: GRC, Operational Performance Management (OPM), errors, multidimensional spreadsheet, server, Business Analytics, Business Collaboration, Business Intelligence (BI), Business Performance Management (BPM), Data, Financial Performance Management (FPM), Information Management (IM), risk management, Sales Performance Management (SPM), controls, spreadsheet, trading