Chapter 1: BEST framework – Foundation for modern financial modeling
In this chapter:
The need for a 360° approach
This section introduces the fundamental challenges in modern financial modeling and why a comprehensive approach is necessary. The BEST framework addresses the evolving needs of financial professionals working with complex spreadsheet models.
Financial models must evolve beyond traditional approaches to embrace modern spreadsheet capabilities while maintaining reliability and transparency.
The BEST principles
The four pillars of the BEST framework provide a structured approach to financial modeling excellence:
Balanced
Financial modelers must find optimum balance between conflicting priorities such as simplicity vs. sophistication, speed vs. accuracy, and flexibility vs. control.
Efficient
The model must be fast and responsive enough to aid proper decision making without compromising on functionality or accuracy.
Stable
The model must remain functional and reliable when users interact with or update the data, ensuring consistent performance across different scenarios.
Thorough
The model should not have loose ends, which creates spreadsheet risk. Every component should be properly documented and validated.
How BEST Principles Compare to Other Standards
This section provides a comparative analysis of the BEST framework against other established financial modeling standards and best practices.
Organizations should evaluate their current modeling standards against the BEST framework to identify areas for improvement and modernization.
Summary
The BEST framework provides a comprehensive foundation for modern financial modeling, addressing the challenges of today's complex financial environment while preparing for future technological advances.