The investigations on recent blackouts have disclosed that one of the main reasons for cascaded tripping of protection systems is hidden failures (HFs). This involves an in-depth study of the different modes of HF in protection systems to assess their impact on cascading events in a power grid. This paper portrays a detailed study on the modeling of different HF modes and proposes a supervised undervoltage load-shedding scheme to further reduce the likelihood of cascading events caused by HFs. The proposed methodology uses two different probabilistic models of HFs to assess HFs’ impact on cascading events. The proposed methodology is validated through numerous case studies on the IEEE 57-bus network. It is also observed that inclusion of self-monitoring and control features in digital relays significantly reduces the risk of wide-area blackouts. The methodology can be effectively adopted for planning, inspection, and repair of the protection system and the maintenance of it where investment guarantees its reliability.