The normally watertight defences of the Swiss financial sector were breached by a US-led crisis, dampening an otherwise successful year for the economy.
The collapsed United States subprime mortgage sector hit Switzerland's biggest bank, UBS, the world's largest reinsurer, Swiss Re, and to a lesser extent, Credit Suisse bank and computer mouse manufacturer Logitech.
UBS was forced to write off more than SFr15 billion ($13 billion) in bad investments and turn to investors in Singapore and the Middle East for SFr13 billion ($11 billion) in emergency funding to restore confidence.
In 2007 the bank lost its chief executive, Peter Wuffli, along with its chief financial officer and its head of investment banking and announced 1,500 job cuts in the investment banking arm. However, chairman Marcel Ospel vowed to carry on in the face of mounting criticism.
Shortly before the crisis erupted, Swiss finance chiefs had announced a bold revamp of the sector with a "master plan" designed to meet future challenges and restore Switzerland to its former top three position of the world's financial centres.
The Swiss stock exchange (SWX) teamed up with the banking, insurance and fund management sectors to improve interaction between the branches and attract more inward investment. The scheme's authors said the reforms could create 80,000 new jobs and generate SFr70 billion ($60 billion) for the Swiss economy by 2015.
SWX also announced plans to streamline its structure and slash trading costs in the light of new European regulations opening up competition.
Experts predicted that the Swiss economy could weather the subprime crisis. This is backed up by impressive trade figures for the first nine months of the year that showed exports and imports booming, with a positive trade surplus of SFr10 billion ($8.5 billion).
Leading indicators predict healthy gross domestic product (GDP) gains of up to 2.8 per cent this year with continued growth, albeit at a slower pace, in 2008. The weak dollar helped ease inflation worries and compensated for high oil prices. But some banks and companies with greenback stockpiles may see profits dented next year.
The watch making industry and luxury goods market performed particularly well in 2007 while the pharmaceutical sector faced changes despite also posting strong results.
Novartis announced it would cut 2,500 jobs to generate annual savings of SFr1.6 billion ($1.81 billion) as profits were squeezed by generic competition and increased regulation. The Basel-based giant looked to have lost a controversial legal suit against the Indian government's decision not to grant leukaemia drug Gleevec patent protection.
Franz Hummer, chairman and chief executive of rival firm Roche, announced he would vacate his CEO role next year, as many big Swiss institutions embarked on a managerial merry-go-round.
Both UBS and Credit Suisse welcomed new chief executives in 2007, while food giant Nestlé will have a new CEO from April. Dental implant manufacturers Nobel Biocare waved goodbye to boss Heliane Canepa while Converium CEO Inga Beale was ousted when the reinsurer was taken over by French rival Scor.
Still on the takeover front, insurer Swiss Life changed strategy by divesting its Banca del Gottardo private bank and its Belgian and Dutch units before announcing its intention of buying German investment advisor AWD.
The "foreign invasion" of Russian and Austrian investors came to a head after both were accused of abusing regulatory loopholes in the process of consuming some of Switzerland's best known manufacturing brands.
Russian billionaire Viktor Vekselberg teamed up for a short time with Austrian private equity group Victory to secretly snap up large swathes of shares in various companies until one manufacturing target, Sulzer, called foul play, leading to a revision of disclosure rules.
Sulzer's argument with Vekselberg is still rumbling on and claimed the heads of senior staff at the Zurich Cantonal Bank after it was found to be aiding and abetting the foreign invaders.
Swiss-Swedish engineering company ABB continued its recovery from near extinction by snapping up a number of lucrative contracts worldwide as it took advantage of increased demands for both conventional and alternative energy.
But global economic uncertainties still remain - not least how much more will the subprime crisis cost (currently estimated at up to $300 billion) and how widely spread are the bad investments.
Next year promises to test Switzerland's reputation as a conservative risk-adverse financial centre to the maximum.
swissinfo, Matthew Allen in Zurich
In December, Swiss Economic Institute KOF raised its GDP growth forecasts for 2007 and 2008 to 2.9% and 2.1% respectively, from its previous prediction of 2.8% and 1.9 %.
The State Secretariat for Economic Affairs (Seco) predicts Swiss GDP to grow 2.3% this year and 1.9% in 2008.
The Swiss National Bank predicts growth of 2.5% (2007); 2% (2008).
BAK Basel Economics: 2.7% (2007); 2.3% (2008).
Subprime mortgages are housing loans that are sold to people with low income and a poor credit rating. These mortgages are then packaged together and traded as mortgage-backed securities on the financial markets.
The industry started to show cracks last year when defaults rose and some mortgage lenders, most notably New Century Financial Corporation, went bust. As the problem worsened, it spread to banks that had bought the now worthless mortgage-backed securities.
The worst affected institutions were mainly US investment banks such as Citigroup and Merrill Lynch.
But UBS has so far written off more than SFr15 billion in bad investments, Credit Suisse SFr2 billion, Swiss Re SFr1.2 billion and Logitech SFr78 million.