Under certain circumstances, the product may produce wrong results. It is defined as the deviation of the delivered service from compliance with the specification.
Not all the defects result in failure as defects in dead code do not cause failure.
Environmental conditions, which might cause hardware failures or change in any of the environmental variables.
Human Error while interacting with the software by keying in wrong inputs.
Failures may occur if the user tries to perform some operation with intention of breaking the system.
Loss of Time
Loss of Money
Loss of Business Reputation.