The ISO 26262, titled "Road vehicles - Functional safety," is a Functional Safety standard that gives a guidance to reduce the risks to tolerable level by providing feasible requirements and processes. This standard is an adaptation of the Functional Safety standard IEC 61508 for Automotive Electrical/Electronic and programmable electronic Systems. The standard covers the development of safety-related electrical, electronic and programmable electronics systems in the road vehicles. It will have a significant impact on the way such systems are designed, developed, integrated and validated for safety. Functional safety of embedded systems has become an integral part in automotive engineering activities due to the recently released safety standard ISO 26262. One main challenge is to perform development activities compliant to the standard and provide the respective documentation. Traceability between requirements from a standard, as well as project-specific process and product artifacts throughout the entire development cycle allows compliance assessment to support qualification and certification. The author would like to share the challenges faced through her experience gained in the field with examples from various automotive tier-1 suppliers. The challenges I would like to address are the following: -The resource planning and the cost for the entire functional safety activity -The documentation requirements Maintenance of the same with right traceability -One of the major challenges is the derivation of safety goals with right ASIL level. Hazard Risk analysis (HARA) forms the basis of the entire functional safety activity. The HARA determines the safety goals for the system and the same becomes the basis for deriving functional safety requirements followed by Technical safety requirements which gets translated into HW/SW Design -The ASIL assignment is dependent on the three factors severity, exposure and controllability. Unless we have adequate data and experience the ambiguity exists on the assignment. -Functional safety activity distribution between the OEMs and Suppliers. OEMs have several suppliers and the supplier in turn outsources certain items to sub suppliers. In this process percolating the functional safety requirement derived at the highest level to the supplier items level is to be systemized. I do see the challenges in ownership. -The depth of details to go in the Functional safety requirement and Technical safety requirement documents -Under ASIL decomposition assigning ASILs on decomposition to the respective architectural elements. -It is mandatory to comply the quantitative assessment for HW and obtaining failure rate for all the components used in a system becomes a challenge. Especially we are completely dependent on the failure rate given by the vendor on ASICs and other custom made components. -Proof of avoidance of common failure and cascading failures in the Software level and thus prove the freedom from interference between lower and higher ASIL elements. -Assigning the Diagnostic coverage for the safety mechanisms provided taking the guidance from Appendix D part 5. We always get to a situation where we are not able to map within the list provided. Then one needs to have their own scale which would result in ambiguity.