When the shuttle design was finalized in the late 1970s they knew it had a 2-3% chance of a hull loss per launch. They were still planning to launch it 50 times a year so that would have meant losing a shuttle and crew every year!
The shuttle had hundreds of critical flaws and that 'normalization of deviance' meeting at which slides like this were shown at was a routine part of each shuttle launch. For each of these unacceptable situations they had to convince themselves that, with some mitigation (or not), they could accept it. It was inevitable that something like this was going to happen and then there would be recriminations about the details of that meeting.
Every other crewed space vehicle had an escape system to get the crew away from a failed rocket. The Challenger crew survived the explosion but were killed when the reinforced crew section hit the ocean. Similarly the Colombia astronauts were killed by a thermal protection system that was "unsafe at any speed". When the first few shuttles were launched there was a huge amount of concern about tiles breaking and coming off. Once they'd dodged the bullet a few times they assumed it was alright but it wasn't...
In the literature "normalization of deviance" has turned from a formal process used in managing dangerous technology to incidents such as: surgeon takes a crap and goes to work without washing his hands, forklift operator smokes pot and operates, etc.