The resiliency and reliability of critical cyber physical systems like electrical power grids are of paramount importance. These systems are often equipped with specialized protection devices to detect anomalies and isolate faults in order to arrest failure propagation and protect the healthy parts of the system. However, due to the limited situational awareness and hidden failures the protection devices themselves, through their operation (or mis-operation) may cause overloading and the disconnection of parts of an otherwise healthy system. This can result in cascading failures that lead to a blackout. Diagnosis of failures in such systems is extremely challenging because of the need to account for faults in both the physical systems as well as the protection devices, and the failure-effect propagation across the system.

Our approach for diagnosing such cyber-physical systems is based on the concept of Temporal Causal Diagrams (TCD-s) that capture the timed discrete models of protection devices and their interactions with a system failure propagation graph. In this paper we present a refinement of the TCD language with a layer of independent local observers that aid in diagnosis. We describe a hierarchical two-tier failure diagnosis approach and showcase the results for 4 different scenarios involving both cyber and physical faults in a standard Western System Coordinating Council (WSCC) 9 bus system.