Rioch, who managed the Canaries between July 1998 and March 2000, endorsed Gunn's credentials for the job back in January and insisted relegation from the Championship had not changed his mind.
Asked if re-appointing the goalkeeping great for next season's League One campaign was the right decision, Rioch, 61, told the Evening News: "Absolutely. Something the club needs now is continuity.
"The appointment of Bryan Gunn will bring stability because of his long association with the club over many years as a player and in various other roles.
"I say that despite the fact they have been relegated. It was always going to be a difficult task to try to keep them up because you're taking on a team that's losing games on a regular basis and has a losing mentality. The one ingredient missing was confidence and it's not easy to regain it.
"I still believe it's a good appointment because one thing the club doesn't need is continually changing their manager and coaches."