Controversy lifecycle analysis: better risk management for investors

In our latest case study, “Defense and ESG challenges: why is the financial sector shaking?", one striking insight stands out: many controversies only surface 10–30 years after the facts.

Why?

Defense secrecy, long judicial processes, and opaque chains of responsibility.

But this pattern is not unique to defense. From environmental scandals to human rights violations, every sector faces controversies with long and complex lifecycles.

For instance, recently, a Brazilian Court ordered Volkswagen to pay US$30 million for collective moral damages related to slave labour in the Amazon during Brazil's military dictatorship (1964-1985). The case, initiated by prosecutors in December 2024, demonstrates how controversies can span decades before resolving.

That is why, at AlphaYoda, we’ve built a unique feature into our ESG Controversies Insights^TM solution: The Controversy Lifecycle.

How does it work?

Instead of treating incidents in isolation, our solution connects the dots – linking initial events to all their subsequent developments.

Example with Dassault Aviation

Key components of a controversy lifecycle:

1. Typology

In controversy lifecycle analysis, each event is classified according to specific typologies that track the progression from initial accusations to final resolution. These classifications include key categories such as allegations, investigations, company responses, controversy outcomes (condemnation, fines, settlement etc.)

2. Chronological order

Events are categorized in chronological order, creating a clear timeline of how controversies unfold.

3. Summary

Each event includes a factual summary and source information.

Together, these components transform what could be confusing, scattered news reports into a coherent analytical tool that reveals patterns, escalation points, and resolution trajectories that might otherwise be missed.

Rather than viewing each event as an isolated incident, the lifecycle framework demonstrates how initial allegations in 2021 about bribery in the Rafale deal progressively intensified through French judicial investigations, government raids, and diplomatic tensions, ultimately forcing company responses and defensive statements. This systematic tracking enables financial institutions to understand controversy momentum and anticipate potential developments.

Why does it matter for investors?

For investors, this means a clearer, more complete view of risk exposure, with no blind spots.

• Better risk management

  See where each controversy stands, from early warning to resolution, to guide investment decisions.

  
  

• Measuring company accountability

  Track responses: remediation or recurring issues?

  
  

• Enhanced impact analysis

  Distinguish isolated incidents from structural problems.