This research addresses the need to improve the accuracy of reliability analyses during the early stages of design. A failure modes and mechanisms taxonomy, similar to the hierarchical Functional Basis used in conceptual design, has been developed. In addition, a methodology is provided to classify failures. Current failure taxonomies lack a hierarchical structure, which results in a poor classification of failure where large and often inaccurate assumptions are required. The correct classification of failure is a critical piece to many analyses in reliability engineering. Failure Modes Effects Analysis (FMEA), Function-Failure Design Method (FFDM) [1], and many other analyses will directly benefit from a hierarchical failure mode and mechanism taxonomy and the ability to correctly classify failures. Results show that a failure is more precisely and accurately defined using the proposed failure statement. This is shown using examples and discussion. The frequent and important question concerning taxonomy completeness is discussed, and is further addressed by providing a simple process to update the taxonomy.