It was noted, however, that there were  BIS Review 109/2007  1  downside risks to this favourable outlook for economic growth which included “the possibility of potential abrupt shifts in global financial market sentiment leading to a repricing of risks”. The month of August was characterised by a substantial increase in financial market volatility and a reappraisal of risk.
The financial market turbulence was triggered by a series of events which intensified tensions in the US subprime mortgage market. This resulted in an adjustment of investors’ attitudes towards risk – a diminished appetite for risky assets – and led to an increase in uncertainty about financial market conditions and prospects. Market volatility rose sharply in almost all asset classes.