Olsson, who joined West Brom from the Dutch club NEC Nijmegen for £800,000 during the summer, said: "Terry should have kicked the ball away."
He added: "I have full confidence in Scott and he is one of the players who has impressed me most here at Albion.
"Scott had a tough game for England against Croatia last season but the way he has been playing shows he has put that experience behind him.
"That is football. You make mistakes and you learn from them. I think he has moved on well since then. The way he has been playing this season he has won some points for us."