The risks for conducting operations this way are innumerable, but here are some of the most critical ones:

Security limitations – Spreadsheets are open by nature. They're not encrypted and are incredibly vulnerable to outside access, especially when you have many people in an HR department who need to consistently open, edit, and share these documents. And they're not just sharing them internally – most large companies are sending these spreadsheets to multiple providers in different countries via email, with this personal information as an attachment. So, there's an added risk that the information is sent to the wrong person or is hacked en route to its intended destination.
Unauthorized access – When you're collaborating on manual spreadsheets, it's easy for an unauthorized person to get copied into the conversation or otherwise inadvertently sent a document that should require a passcode to view.

In addition to security risks, spreadsheets pose a threat to the validity of employees' personal information:

Typing errors – Nearly 90 percent of spreadsheets contain errors that range from minor to severe, according to recent studies like this one – primarily because companies rely on manual data entry and customized formulas. When you're talking about personal information from thousands of employees, this is an unacceptable rate.
Versioning mistakes – Global companies typically have an HR department or representative in several different regions around the world. This can easily lead to people working from the wrong document, updating it with irrelevant information, and more. The chances of this happening are only increasing with trends like BYOD, where employees might open a third party document to edit something on their own device.

Many companies are moving away from these manual processes for their American employees. They also have prepared back-ups plans and other security measures in the case of a breach. However, the waters are a bit murkier when you look at the global pictures.

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