Losses

Loss is the state or condition of having less than before or suffering destruction of value. In economics and business, losses occur when expenses exceed revenues or when assets decline in value. Loss can be realized (actual cash outlay) or unrealized (impairment or mark-to-market).

In accounting, a net loss arises when total expenses and losses exceed total revenues and gains for a period. Distinctions include operating loss (from core business activities) and non-operating or financing losses. Losses can be realized from selling assets below their carrying amount (capital losses) or from impairment of assets. Tax treatment varies by jurisdiction. Financial statements present losses on the income statement and may reveal accumulated deficits on the balance sheet.

In statistics and machine learning, a loss function measures the discrepancy between a model's predictions and actual outcomes. The goal of learning is to minimize the expected loss. Different loss functions reflect different penalties; examples include squared loss, absolute loss, cross-entropy loss, hinge loss. Loss optimization is central to many algorithms.

Beyond finance and statistics, losses occur in insurance (claims), inventory and spoilage, energy losses, or physical damage. Organizations implement loss prevention, risk management, and internal controls to reduce frequency and severity of losses. Loss statistics inform planning, pricing, and regulatory compliance.