Solvency II dictates the internal model must be shown to be effective in a number of different scenarios.  It must be documented and easily interpreted by the business.  Where the internal model is not documented, once the complexity of the model is fully appreciated it soon becomes obvious the model in fact poses a threat and real risk to the business because it is highly likely to be understood only by a very limited number of key staff.  Solvency II aside, unless an insurer has a clear documented internal model that can easily be understood throughout the business they are exposed to unnecessary risks which need to be resolved as fast as possible.

Spreadsheets are and will remain the tool of choice for analysts, risk specialists and actuaries.  They are cost effective and provide adaptive technologies in dynamic fast changing environments such as the Insurance industry.  Spreadsheets will continue to thrive within the business environment and be used come what may to support the key areas.  However in order to develop a control function around them the first task is to fully understand what they are doing.  Whilst that should seem obvious, a large number of insurers simply do not have fully documented models and are perplexed with where to start.

The vast majority of insurers are however looking for a silver bullet to help unravel the many layers and multiple tiers of workbooks and work sheets that comprise their internal capital model system.  The current crop of spreadsheet management applications do not help with the underlying task at hand of explaining and documenting in a clear, easily understood fashion what the different spreadsheets are doing and where the underlying data is extracted.