Failure modes and effects analysis (FMEA) is a quality improvement and risk assessment tool commonly used in industry. It is a living document used to capture design and process failure information. However, the traditional FMEA has its limitations in terms of knowledge capture and reuse. In order to increase its effectiveness, much research has been carried out to find an effective way to provide FMEA generation. However, because of the complexity of the information needed, most of the research concentrates on the application for a specific design domain. This paper reviews various FMEA research studies and modelling and reasoning methods that can be used for generic applications. A new proposal made is based on the ‘knowledge fragment’ reasoning concept suggested by Kato, Shirakawa and Hori in 2002. FMEA is introduced in the conceptual design stage so as to minimize the risks of costly failure. The method enables new knowledge to be formed using the limited available information in the conceptual design stage. A prototype has been created to evaluate the proposed method. Case studies have been conducted to validate the proposed method. The case studies show that the method is able to provide reliable results with limited information.