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"You are horrified by your situation!"
"You panic!"

Panicked is a state where your character is maddened by fear. They have seen something awful, or had something so horrible happen that their natural survival instincts have kicked in and they are unable to do anything but run away at top speed.

When you are panicked, you are forced into "running" stance and cannot rest or attack until you have calmed down. You can however fight back if you are cornered and unable to move in any possible direction other than one occupied by a monster.

Panic can be cured simply by waiting for it to wear off, or by more artificial means such as consuming alcohol or applying a Horn of Bravery. It is strongly recommended to cure panic as fast as possible, since being forced to run at all times means you are very likely to run yourself to exhaustion and pass out, allowing any passing enemy to beat you to death for free.

Almost every intelligent being in the game can be panicked by the same means - namely taking a large amount of damage in a short period of time, seeing an extremely powerful opponent, or falling to low HP. There are very few exceptions to this rule.

Panic can also be inflicted by applying a Horn of Fear.

"You finally calm down."