Anomaly Detection

Encord Computer Vision Glossary

Anomaly detection, also known as outlier detection, involves identifying unusual data points within a dataset. These anomalies can arise due to various factors, such as data errors, fraud, or novel occurrences. Traditional rule-based methods often struggle with the complexity of this task, leading to the integration of machine learning techniques for more robust anomaly detection.

Types of Anomalies

Anomalies can take on various forms, each requiring tailored detection strategies:

  • Point Anomalies are individual data points that deviate significantly from the norm. Examples include fraudulent credit card transactions, sensor malfunctions, or rare diseases.

  • Contextual Anomalies are anomalies that are context-dependent, as the name suggests. A data point might be considered normal in one context but anomalous in another. For instance, an unusually high temperature reading might be normal during summer but anomalous in winter.

  • Collective Anomalies are anomalies that involve a group of data points exhibiting anomalous behavior when considered together. Collective anomalies are often observed in network traffic or social network interactions.
  • Seasonality Anomalies: Anomalies that exhibit irregular patterns or behaviors tied to seasonal changes. These anomalies can be observed in areas such as weather data, retail sales during holiday seasons, and energy consumption.

Methods of Anomaly Detection

Statistical Methods

Statistical methods are the foundation of anomaly detection. These techniques involve establishing a statistical distribution that characterizes the dataset's normal behavior.  Data points that fall outside a certain range or threshold are flagged as anomalies. Common statistical methods include:

  • Z-Score: This metric standardizes the data by calculating the z-score, which represents how many standard deviations a data point is away from the mean. Data points with a z-score above a certain threshold are considered anomalies.

  • Percentile-based Methods: These methods identify anomalies based on percentiles of the data distribution. For instance, the Interquartile Range (IQR) is used to detect data points that lie beyond a certain percentile range.

Machine Learning Algorithms

Machine learning algorithms can effectively detect anomalies in  complex datasets. They can be broadly categorized into supervised, semi-supervised, and unsupervised machine learning models:

  • Supervised Learning: In supervised anomaly detection, the model is built on labeled training data that contains both normal and anomalous examples. The model learns to differentiate between the two classes and can then classify new data points. However, obtaining labeled anomaly data can be challenging.

  • Semi-Supervised Learning: These methods leverage a small amount of labeled anomaly data along with a larger set of unlabeled data. The model learns to find the boundary between normal and anomalous regions, often using techniques like one-class SVM (Support Vector Machine) or autoencoders.

  • Unsupervised Learning: Unsupervised methods don't require labeled data and focus solely on the data's inherent structure. Clustering algorithms like DBSCAN (Density-Based Spatial Clustering of Applications with Noise) and Isolation Forest are popular unsupervised anomaly detection techniques.

Time Series Anomaly Detection

Time series data, where data points are collected sequentially over time, poses specific challenges for anomaly detection. Anomalies in time series data might represent sudden spikes, drops, or shifts in patterns. Methods for time series anomaly detection include moving averages, exponential smoothing, and more advanced techniques like Seasonal Hybrid ESD (Extreme Studentized Deviate) Test.

Popular Anomaly Detectors

Several anomaly detection algorithms have gained popularity across various domains:

  • Isolation Forest: This decision tree-based algorithm isolates anomalies by partitioning data into subsets. Anomalies are identified as instances that require fewer splits to isolate.

  • Local Outlier Factor (LOF): LOF assesses the local density of data points and compares it to the densities of their neighbors. Points with significantly lower densities are flagged as anomalies.

  • One-Class SVM: This method learns a boundary around normal instances, enabling it to identify anomalies as data points lying outside this boundary.

  • Autoencoders: Neural network architectures like autoencoders learn to encode input data and then decode it back to the original space. Anomalies are detected by measuring the difference between input and output.

  • DBSCAN: Density-Based Spatial Clustering of Applications with Noise (DBSCAN) identifies dense regions of data and flags points in sparser regions as anomalies.

  • K-Means and K-Nearest Neighbors (KNN): K-Means clustering groups data into clusters, and the anomalous data can be detected by examining data points that don't belong to any cluster. KNN identifies anomalies based on the distance to their k-nearest neighbors. Both methods are sensitive to abnormal behavior.

  • Bayesian Networks: Bayesian networks model probabilistic relationships between variables and can capture complex dependencies, identifying deviations from expected patterns.

Applications of Anomaly Detection

The use cases of anomaly detection are far-reaching and diverse, reflecting its significance across various industries:

  • Finance: Anomaly detection is crucial in finance for identifying fraudulent activities such as credit card fraud detection, insider trading, and money laundering. Unusual transaction patterns, sudden changes in stock prices, or abnormal trading behaviors can be indicative of fraudulent activities.

  • Healthcare: In healthcare, anomaly detection assists in identifying rare diseases, patient outliers, and abnormal medical conditions. Monitoring patient data, such as vital signs and laboratory results, can lead to early detection of critical health issues.

  • Cybersecurity: Anomaly detection is a cornerstone of cybersecurity. It helps in identifying malicious activities and cyberattacks by analyzing network traffic, user behaviors, and system logs. Unusual patterns of data access or abnormal network traffic can signal potential security breaches. While cybersecurity threats can come from external sources,  insider threats in the financial sector are a significant concern, where anomaly detection techniques can help identify and mitigate risks posed by malicious insiders or compromised credentials.  

  • Industrial Monitoring: Industries rely on anomaly detection to ensure the smooth operation of complex systems. Manufacturing processes, energy production, and equipment monitoring benefit from early identification of faults or deviations that could lead to breakdowns or accidents.

  • Internet of Things (IoT): IoT devices generate massive amounts of data from various sources. Anomaly detection is essential to detect unusual patterns or malfunctions in IoT data, ensuring optimal performance and minimizing downtime.

  • Quality Control: In manufacturing, anomaly detection is used for quality control by identifying defective products or faulty components. This helps maintain product quality and reduces waste.

  • Natural Disasters: Anomaly detection plays a role in monitoring environmental data to predict natural disasters. Unusual seismic activities, changes in atmospheric conditions, or deviations in sensor data can provide early warnings for earthquakes, tsunamis, and storms.

Challenges in Anomaly Detection

Anomaly detection offers significant advantages. However,it is not without its challenges:

Imbalanced Data

Anomalies are often rare compared to normal data points, leading to imbalanced datasets. Traditional machine learning models might struggle to accurately identify anomalies due to their limited exposure to such instances.

Lack of Labeled Anomaly Data

Supervised methods rely on labeled data, which can be difficult to obtain for anomalies. This limitation has led to the development of unsupervised and semi-supervised techniques.

Evolving Anomalies

Anomalies can change over time due to shifting behaviors, new attack strategies, or changing environmental conditions. Models need to adapt to these changes to maintain accuracy.

Feature Engineering

Choosing relevant features for anomaly detection is crucial. Incorrect or insufficient features might result in poor anomaly identification.


Some complex anomaly detection models, like deep neural networks, lack interpretability. Understanding why a model flagged a certain data point as an anomaly can be challenging.


Scalability is a crucial consideration in anomaly detection, especially when dealing with real-time anomaly detection applications such as IoT and network monitoring. Anomaly detection techniques must possess the capability to efficiently handle large datasets in real-time scenarios, ensuring timely identification of anomalies as they occur.

False Positives and Negatives

Balancing the trade-off between minimizing false positives (normal data flagged as anomalies) and false negatives (anomalies not detected) is a challenge in developing effective anomaly detection systems.

Anomaly Detection: Key Takeaways 

Anomaly detection, empowered by machine learning, revolutionizes how industries perceive and address abnormalities within datasets. Its applications span across sectors such as finance, healthcare, and cybersecurity, enhancing decision-making and mitigating risks. Despite challenges like imbalanced data and interpretability concerns, the synergy between anomaly detection algorithms and machine learning drives innovation in automating anomaly identification and enabling preemptive actions. As artificial intelligence continues to evolve, anomaly detection methods optimize their ability to unveil the unusual and derive meaningful insights from the data patterns that shape our world.

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