However, as the turmoil has since shown, there was a generalised tendency to overestimate the true degree of risk spreading and diversification, especially in credit markets. Warnings by the authorities about the possibility of an abrupt correction in financial markets date back to 2006.
Many warnings were made about the risks associated with what was essentially a “pricing for perfection” – which, put simply, meant that risk premia were not, or  BIS Review 6/2009  1  hardly pricing in the possibility of anything going wrong. Given such pricing, even a small change in conditions had the capacity to severely disrupt financial markets.