Jan

23

Alternative to value at risk

January 23, 2026 |

alternative to value at risk invented by the Japanese quality of control scholar Taguchi.

Loss functions and constraints improve sea surface height prediction

In order to understand currents, tides and other ocean dynamics, scientists need to accurately capture sea surface height, or a snapshot of the ocean's surface, including peaks and valleys due to changes in wind, currents and temperature, at any given moment. In order to more accurately forecast ocean circulation and other processes, climate variability, air-sea interactions and extreme weather events, researchers need to be able to accurately predict sea surface height into the future.

Taguchi loss function

The Taguchi loss function is graphical depiction of loss developed by the Japanese business statistician Genichi Taguchi to describe a phenomenon affecting the value of products produced by a company. Praised by Dr. W. Edwards Deming (the business guru of the 1980s American quality movement), it made clear the concept that quality does not suddenly plummet when, for instance, a machinist exceeds a rigid blueprint tolerance. Instead 'loss' in value progressively increases as variation increases from the intended condition. This was considered a breakthrough in describing quality, and helped fuel the continuous improvement movement.

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