Understanding the Risks of Normalizing Deviations PPT

This PPT slide, part of the 24-slide Risk Management: Complex Supply Chains PowerPoint presentation, addresses the concept of "Normalization of Deviation," a term introduced by Diane Vaughan in her analysis of the Challenger space shuttle disaster. It emphasizes how repeated deviations from established evaluation criteria can lead to a dangerous acceptance of irregularities as the norm. The slide outlines the risk area, providing a clear definition and relevant examples to illustrate its implications.

The description highlights the importance of regularly checking deviations that might stray from evaluation standards. This practice is crucial in preventing the normalization of issues that could compromise safety and decision-making integrity. The examples provided, particularly referencing the subprime mortgage crisis, serve to illustrate how deviations in lending practices became accepted over time. Independent mortgage brokers tested increasingly diverse borrower profiles, leading lenders to approve more unconventional cases. This shift created a new normal, which ultimately contributed to systemic risks.

The slide suggests that organizations must be vigilant in monitoring deviations to avoid the pitfalls seen in past crises. Accepting deviations without critical assessment can lead to a normalization process that undermines the integrity of evaluation rules and decision-making frameworks. The insights presented are particularly relevant for executives looking to enhance risk management strategies within their organizations. They underscore the necessity of maintaining rigorous standards and the potential consequences of complacency in evaluating deviations.

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Risk Management Supply Chain Analysis Supply Chain