Answer
According to the ISM Code (Revised Edition):
Observation:
"An observation means a statement of fact made during a safety management audit and substantiated by objective evidence." It is a minor slip or an isolated operational lapse that does not compromise the vessel’s safety, the crew, or the environment, but could lead to a non-conformity if left uncorrected.
Major Non-Conformity:
"Major non-conformity means an identifiable deviation that poses a serious threat to the safety of personnel or the ship or to the environment that requires immediate corrective action or the lack of effective and systematic implementation of a requirement of this Code." Examples: An completely non-functional Emergency Generator, an inoperative OWS being bypassed, or total failure of the crew to conduct mandatory emergency drills.