A method, system and computer program product for intelligently responding to hardware failures so as to optimize system performance. An administrative server monitors the utilization of the hardware as well as the software components running on the hardware to assess a context of the software components running on the hardware. Upon detecting a hardware failure, the administrative server analyzes the hardware failure to determine the type of hardware failure and analyzes the properties of the workload running on the failed hardware. The administrative server then responds to the detected hardware failure based on various factors, including the type of the hardware failure, the properties of the workload running on the failed hardware and the context of the software running on the failed hardware. In this manner, by taking into consideration such factors in responding to the detected hardware failure, a more intelligent response is provided that optimizes system performance.