This paper presents a novel technique called nested m-trail method in all-optical mesh networks for failure localization of any shared risk link group (SRLG) with up to d undirected links. The proposed method decomposes the network topology into virtual cycles and trails, in which sets of m-trails that traverse through a common monitoring node (MN) can be obtained. The nested m-trails are used in the monitoring burst (m-burst) framework, in which the MN can localize any SRLG failure by inspecting the optical bursts traversing through it. An integer linear program (ILP) and a heuristic are proposed for the network decomposition, which are further verified by numerical experiments. We show that the proposed method significantly reduces the required fault localization latency compared to the existing methods.