Electronics in vehicle is increasing continuously and a modern luxury vehicle has more than 50 ECUs present, out of which airbags, brakes, chassis control, engine control, and X-by-wire are safety critical systems. All safety critical automotive systems have been provided with fail-safe function. Fail-safe operation prevents improper system functioning or catastrophic degradation in the event of system malfunction. Failures may arise from incorrect specifications of the system, omissions in the safety requirements specification, hardware failures, software errors, human error, environmental influences or supply system voltage. In order to ensure the conformance in standardized manner, many international norms such as IEC 61508 and ISO 26262 are evolved. These safety requirements are implemented in hardware or software. In safety critical embedded systems, the fail safe functionality has to be implemented at multiple levels and in different architecture components such as components, ECU hardware, microcontroller, operating system and application software. This paper brings out the current multi-level approaches of fail-safe concept in these major architecture components and future trends in fail safe operations in automotive embedded systems. The designer needs to configure the fail safe architecture for the system appropriately depending on required safety integrity level for the system. In addition, C programming techniques, the development environment such as compilers, assemblers etc. and validation strategy are focused to take care of function safety requirements. This paper gives a perspective of fail safe mechanism at various architectural levels in safety critical systems and helps the designer to choose appropriate safety configuration for a given system to meet required safety targets.