This inspection warns you of characters that the current document encoding is incapable to represent.
For example, when you are

- typing international characters in a document configured to US-ASCII charset. Some characters will be lost on save.
- or loading UTF-8-encoded file using ISO-8859-1 one-byte charset. Some characters will be displayed incorrectly.

You fix this by changing the file encoding, either by specifying the encoding directly in the file, e.g. by editing encoding= attribute in the XML prolog of XML file, or configuring the Settings|Project Settings|File Encodings .