How would you handle an imbalanced dataset?

Sampling Techniques can help with an imbalanced dataset. There are two ways to perform sampling, Under Sample or Over Sampling.

In Under Sampling, we reduce the size of the majority class to match minority class thus help by improving performance w.r.t storage and run-time execution, but it potentially discards useful information.

For Over Sampling, we upsample the Minority class and thus solve the problem of information loss, however, we get into the trouble of having Overfitting.

There are other techniques as well –
Cluster-Based Over Sampling – In this case, the K-means clustering algorithm is independently applied to minority and majority class instances. This is to identify clusters in the dataset. Subsequently, each cluster is oversampled such that all clusters of the same class have an equal number of instances and all classes have the same size

Synthetic Minority Over-sampling Technique (SMOTE) – A subset of data is taken from the minority class as an example and then new synthetic similar instances are created which are then added to the original dataset. This technique is good for Numerical data points.