The difference in definition between accuracy and precision is quite subtle. However, the slight difference in definition might make all the difference in the world. There's a good sports analogy that explains the difference between accuracy and precision. This analogy should help with the rest of this discussion.
Accuracy vs. Precision
Let's say that a basketball player is very adept at attempting to throw baskets that always end up in the very same place. If each shot lands within millimeters of the last one, the throws would be described as precise. However, there is nothing in this description that tells us if the player actually scored any points or not. On the other hand, a player who consistently makes baskets would be considered accurate, and this could be true if sometimes the shots slide off the rim, bounce off of the board, or just swoosh right into the basket.
In other words, accuracy describes a correct or productive solution. Precision describes results that can be duplicated time after time. They are not always the same thing. As risk managers, tasked with protecting your company against hazards, your goal is, as they say in another sport, hockey, to slip the biscuit in the basket. Evolving situations mean that the same answer isn't always the right answer, so your goal may be accuracy and not precision. You and your company cannot afford to get so bogged down by the numbers that you lose sight of your goal.
Risk Managers Aren't Auditors
All too often, risk managers end up focusing on the task of auditing data instead of concentrating on making the right decisions and viewing the big picture. If your working day includes more time spent trying to track down confirmation of a property value or converting GBP into USD, you probably don't have enough time to review reports and trends to make good risk management decisions about insurance renewals, safety programs, and other things that can help your company save money and become safer.
There is little doubt that data errors can impact your ability to make the right decisions. For example, you might refer to our early article about the pervasive problem of data errors for businesses. Companies should have auditing departments to ensure that data is precise enough to ensure accuracy. A risk management information system, or RMIS, helps ensure this data is easy to audit and has been correctly entered and formatted at the source. The point is that companies should have streamlined and efficient processes in place to make sure that risk managers don't spend their time auditing.
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