Fudge and the Ministry
Fudge refused to believe something he did not want to be true. Of course, Fudge had an explanation for himself to believe in, that Barty Crouch jr. was acting alone. This allowed him to believe that while some awful events had occurred, everything had been resolved and general order hadn't been upset.
"Why he killed them? Well, that's no mystery, is it?" blustered Fudge. "He was a raving lunatic! From what Minerva and Severus have told me, he seems to have thought he was doing it all on You- Know-Who's instructions!"
"Lord Voldemort was giving him instructions, Cornelius,"
Dumbledore said. "[...] Voldemort has been restored to his body."
Fudge looked as though someone had just swung a heavy weight into his face. Dazed and blinking, he stared back at Dumbledore as if he couldn't quite believe what he had just heard. He began to sputter, still goggling at Dumbledore.
"You-Know-Who . . . returned? Preposterous. Come now, Dumbledore . . ."
"You fool!" Professor McGonagall cried. "Cedric Diggory! Mr. Crouch! These deaths were not the random work of a lunatic!"
"I see no evidence to the contrary!" shouted Fudge, now matching her anger, his face purpling. "It seems to me that you are all determined to start a panic that will destabilize everything we have worked for these last thirteen years!"
"You are blinded," said Dumbledore, his voice rising now, the aura of power around him palpable, his eyes blazing once more, "by the love of the office you hold, Cornelius! [...]"
Harry Potter and the Goblet of Fire, chapter 36, "The Parting of the Ways"
Fudge did not want Voldemort to have returned, so he refused to believe that had happened.
It seemed Fudge could think of no answer to this. He rocked backward and forward on his small feet for a moment and spun his bowler hat in his hands. Finally, he said, with a hint of a plea in his voice, "He can't be back, Dumbledore, he just can't be . . ."
The Wizarding World
So Fudge had an explanation for himself to cling to. He also had an explanation for the wizarding world in general.
The Triwizard Tournament was known to be dangerous, deadly even. This was even deemed acceptable until the death toll mounted too high.
"The Triwizard Tournament was first established some seven hundred years ago as a friendly competition between the three largest European schools of wizardry: Hogwarts, Beauxbatons, and Durmstrang. A champion was selected to represent each school, and the three champions competed in three magical tasks. The schools took it in turns to host the tournament once every five years, and it was generally agreed to be a most excellent way of establishing ties between young witches and wizards of different nationalities — until, that is, the death toll mounted so high that the tournament was discontinued."
Dumbledore explaining the Triwizard Tournament in Harry Potter and the Goblet of Fire, chapter 12, "The Triwizard Tournament"; emphasis mine.
Of course, we're now centuries later.
"There have been several attempts over the centuries to reinstate the tournament," Dumbledore continued [...]
But it is still dangerous.
"[...] the tournament tasks will still be difficult and dangerous, whatever precautions we take [...]"
All in all, Cedric's death could be chalked up to his participation in a dangerous tournament that has been known to cause deaths in its previous instalments.