Almost every major regulatory improvement comes with a story, often involving failure, such as a breach, scandal, controversy or major enforcement action. To build resilience and prevent public failures, high-reliability organizations offer a model for regulatory agencies to follow. In her presentation at the North American Gaming Regulators Association annual training and education conference, GL Solutions’ Client Executive Michelle Shaffer explored how high-reliability organization principles help regulatory agencies build regulatory resilience.
These HROs operate in high-risk environments yet maintain strong safety and performance standards because they learn early, adapt quickly and pay attention to weak signals. Examples of high-reliability organizations include nuclear power plants and firefighting crews. Those lessons matter for regulatory agencies because public trust depends on detecting risks sooner, learning from near misses and improving before small issues lead to public failures
According to professors at the University of Michigan’s Ross School of Business on Managing the Unexpected, “although ordinary companies do not face do-or-die circumstances of the same magnitude, they can learn a great deal from HROs about managing their operations effectively under trying conditions so crisis can be avoided.”
Five high-reliability organization principles help regulatory agencies build systems that support learning before a crisis arrives. Learn the five principles of high-reliability organizations to help your agency learn before failure arrives and strengthen regulatory resilience. Shaffer unpacks these ideas in the presentation she delivered at the NAGRA conference. In her talk, “Learning without Crises: Building Regulatory Resilience without Failure,” Shaffer joined Karin Schnarr of the Alcohol Gaming Commission of Ontario to present to regulators.
Key Takeaways
The concept of high-reliability organizations comes from researchers at the University of Michigan—Karl Weick, Rensis Likert Distinguished University Professor of Organizational Behavior and Psychology, along with Kathleen Sutcliffe, Associate Professor of Organizational Behavior and Human Resource Management. They explain these ideas in their book, Managing the Unexpected: Sustained Performance in a Complex World.
“In reality,” explain the authors, “business organizations are better served by focusing on earlier, less obvious events where something out of the ordinary occurs or there is a near miss. Often these small details contain huge amounts of important information and may be indicators that everything is not going quite right in the company. By taking the time to understand a complex situation thoroughly-or “sense-making”-before jumping to a decision, managers can take steps to deal properly with an unforeseen event on an issue level, rather than a problem or crisis level. HROs constantly engage in this ‘struggle for alertness’ and continually revise and update their information as events unfold; they often are suspicious of first impressions, which may be misleading or inconclusive.”
Their research identified five principles that consistently appear in high-reliability organizations; these help them develop “mindfulness” around issues, along with enhancing their ability to manage the unexpected.
The first principle, preoccupation with failure, means paying close attention to weak signals before they turn into crises. Examples of these signals include unusual complaints, small cybersecurity incidents or licensees exploiting gray areas. While many organizations overlook these events because no harm occurred, high-reliability organizations treat them as valuable warnings. They understand that major failures often start as small, easy-to-miss issues. For regulatory agencies, learning from near misses and minor anomalies remains essential to improving regulatory oversight and maintaining trust.
The second principle, reluctance to simplify, means resisting easy explanations when something goes wrong. Rather than blaming human error, a bad actor or an isolated incident, they examine the larger system to understand what contributed to the problem. They ask deeper questions about failed assumptions, missing information, incentives and process gaps. For regulators, a breakdown such as a failed self-exclusion process may reflect not one mistake but a combination of training, technology, procedures integration and policy design. Real learning happens when agencies move beyond blame and examine the system, strengthening regulatory compliance and long-term agency performance.
The third principle, sensitivity to operations, asks organizations to monitor on-the-ground activity, where daily work often differs from written policy. High-reliability organizations stay connected to investigators, auditors, inspectors and operators because early warning signs often surface on the front line. For regulatory agencies, maintaining that front-line awareness helps leaders spot gaps between procedure and reality and respond before emerging risks turn into larger failures, improving regulatory operations and compliance monitoring.
The fourth principle, commitment to resilience, means recognizing that failures occur and focusing on adapting quickly. High-reliability organizations strive to detect issues early, respond effectively and learn continuously. For regulatory agencies, that resilience becomes even more important as technology and innovation continue to accelerate, making agency modernization a strategic priority.
The fifth principle, deference to expertise, means recognizing that the person closest to the issue often understands it best. High-reliability organizations create ways for investigators, auditors, analysts, inspectors and technical specialists to offer their expertise. For regulatory agencies, that approach helps surface the right insight at the right time; when new risks emerge, expertise matters more than title and supports stronger regulatory decision-making.
Public confidence grows when regulators identify problems early, learn continuously and adapt faster than the risks they oversee. High-reliability organizations create cultures of awareness, learning and adaptation that help agencies strengthen regulatory agency resilience before a crisis occurs. Modernization supports that work because regulatory technology enables learning. Modern regulatory platforms help agencies identify patterns, detect trends and share knowledge. With the pace of innovation facing state regulators today, such as artificial intelligence and predictive analytics, regulators need systems that help them innovate, adapt and learn.
To learn more about these principles and how they apply to state regulation, contact us.
Sam Hardin, Chief Revenue Officer, joined GL Solutions in 2020 with a background in operations management. He is passionate about leadership, enhancing company culture and personal/professional growth. Sam studied business management throughout his undergraduate and graduate studies.
