Blunder in panic losing head (5)
I believe the answer is:
error
'blunder' is the definition.
(I've seen this before)
'panic losing head' is the wordplay.
'panic' becomes 'terror' (synonyms).
'losing head' means to remove the first letter.
'terror' with its initial letter taken off is 'ERROR'.
'in' is the link.
(Other definitions for error that I've seen before include "Way of operating" , "Fallacy, mistake" , "A mistake or inaccuracy" , "Miscalculation" , "Faux pas" .)