One or more operational parameters associated with pluggable optical transceivers are estimated to mitigate impairments to an optical signal caused by imperfections in the optical transceivers. A monitoring algorithm within a receiver signal processor may further use the estimated operational parameters associated with the pluggable optical transceivers to determine whether the transceivers are performing correctly. If the monitoring algorithm determines that either the transmitting or receiving optical transceiver is not functioning correctly, it may generate an alarm signal to notify a system administrator about the damaged device.