The battlefield is full of noise, confusion and death. Faced with allies and comrades meeting grisly ends all around whilst battling fearsome foes, you may find that your warriors succumb to panic and scatter, rather than fight on.
The psychological trauma of battle can cause even the bravest of warriors to panic, and when they do they are likely to flee. Consequently, panic (and more importantly, resisting the urge to give in to panic) plays an important role in Warhammer: the Old World.