A robotic system has arms, arm processors, arm supervisor, and system supervisor. Each arm includes nodes for controlling motors in the arm. Each node, including each arm processor, detects faults affecting the node, places the node into a safe state upon detecting a fault, propagates a fault notification, diagnoses the fault and classifies it, and sends an error message to the supervisor processor. The arm supervisor may detect faults affecting an arm and also perform fault reaction activities. The system supervisor handles the fault as either a system or local fault depending upon its class. For system faults, a fault notification is sent to the arm processors of non-failed arms so that the non-failed arms are placed in the safe state. For local faults, a degraded operation option is provided to a user and if the fault is classified as recoverable, a recovery option is provided to the user.