“There’s a lot of risk out there and yet asset prices are at all-time highs,” she said, BBC reported. “We expect there will be an adjustment at some point.”

“The thing that really keeps me awake at night is the likelihood of a number of risks crystallising at the same time — a major macroeconomic shock, confidence in private credit goes, AI and other risky valuations readjust — what happens in that environment and are we prepared for it?” Breeden said during the interview.

Since the US and Israel began joint strikes on Iran late February, global equity markets have been volatile, but still trading near record highs, with New York’s S&P 500 and Nasdaq Composite closing at new all-time highs recently and global stocks clawing back from Iran war losses. The MSCI World ex-US index, which tracks large and mid-cap stocks listed across more than 20 developed markets, is up more than 5% so far in 2012, and has also rebounded from the Iran war losses.

Breeden also pointed to problems in private credit , where mounting defaults have drawn criticism and concern from market watchers.

“Private credit has gone from nothing to two-and-a-half trillion dollars in the last 15 to 20 years. It hasn’t been tested at this scale with the degree of complexity and interconnections it has with the rest of the financial system so far,” Breeden said. “It’s a private credit crunch, rather than a banking-driven credit crunch, that we’re worried about.”

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