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March 1, 2004

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Overcoming Imprecision and Bias

Originally Published MX March/April 2004

GOVERNMENTAL & LEGAL AFFAIRS

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Measuring Compliance

The statistically minded will immediately see the shortcomings in a compliance index based on the social science model. Imprecision and bias are the main concerns. To the extent possible, any compliance index should be designed to minimize the following causes of imprecision.

  • Compliance is a broad, complex issue with many different aspects and levels.

  • Certain aspects of compliance, such as the corporate culture, are not readily quantifiable, even by trained and experienced personnel trying to evaluate such factors according to defined criteria.

  • Compliance can vary widely from division to division within a particular company.

Attention should also be paid to the following factors that are potential causes of bias.

  • Even within a narrowly defined industry, companies have widely differing thresholds for complaints, recalls, and adverse-incident reporting, despite efforts to statistically control for this and to account for it in gathering index data.

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