What is radius compensation?
If the tooltip was a single point (that is with zero radius), the toolpath could coincide with the part outline.
Because tooltips are not single points, the toolpath must be adjusted.
This is shown below, where the centre of tooltip, shown in red, is not
in contact with the sloping parts of the profile.
How you set the compensation depends on the particular cycle. First check the cycle dialog and if it contains 'Compensation' settings, use these. If not use Radius Compensation in the Tooling menu.
For further help click the dialogs' Help button.