Contagion Path Mapping

Use This Skill When

• The user wants to know how a shock could spread beyond the initial event.
• The task requires mapping second-order and third-order exposures across an ecosystem.
• The analysis needs stress propagation through funding, supply chains, customers, counterparties, or correlated positioning.
• A simple winner-loser list is not enough.

Required Inputs

• origin shock: company event, sector stress, macro event, policy move, credit accident, or geopolitical disruption
• initial exposure set: directly affected names, sectors, or assets
• transmission channels: supply chain, customer concentration, financing, collateral, sentiment, passive ownership, correlation
• time horizon: immediate, next few weeks, or medium-term spillover
• focus: revenue contagion, margin contagion, balance-sheet contagion, liquidity contagion, or valuation contagion
• If the network is only partially known, identify the unknown links and present the map as a scenario tree rather than a factual certainty.

Workflow

1. Define the origin shock precisely and distinguish fundamental from market-structure transmission.
2. Map first-order exposures that are directly connected.
3. Extend to second-order and third-order paths:
   • customer or supplier dependence
   • refinancing dependence
   • collateral and funding stress
   • correlated ownership or factor crowding
   • sentiment spillovers and peer de-rating
4. Rank each path by plausibility, speed, and severity.
5. Explain which paths are likely to fade and which can amplify.
6. End with the most important nodes to monitor for escalation or containment.

Output Requirements

• Present contagion as a path map, not as one undifferentiated risk bucket.
• Separate fundamental transmission from market-structure transmission.
• Rank paths by likely importance.
• Be explicit about timing: same day, weeks, or quarters.
• End with triggers that would prove contagion is spreading or contained.

Output Template

Quality Checks

• Confirm the origin shock is defined clearly enough to map transmission logically.
• Check that direct exposure and contagion exposure are kept separate.
• Verify at least one timing assumption is attached to each major path.
• Make sure path ranking reflects plausibility and severity, not just imagination.
• Remove any node from the map if its connection is speculative and unsupported.

Guardrails

• Do not label every correlated move as contagion.
• Do not confuse sentiment sympathy with economic transmission unless the mechanism is explained.
• Do not present scenario trees as established fact when linkages are uncertain.
• Do not ignore balance-sheet or funding channels when analyzing stressed systems.
• Do not overcomplicate the map with low-probability branches that add little decision value.

Example Prompts

• Map how stress from a major supplier disruption could propagate across this semiconductor ecosystem.
• Build a contagion path map for a regional bank funding shock and identify second-order equity exposures.
• Show how a sharp commodity move could spill from producers into downstream margins, credit spreads, and valuation multiples.