In fact, the diversification of risk appeared to be beneficial not just for the financial sector’s stability, but also for the real economy, since companies were able to more efficiently spread the risks they were bearing. This perception is likely to have encouraged risk-taking not only inside but also outside the financial sector.
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.