A class of models for system reliability is presented which (a) introduces the notion of random variability of environment, and hence of instantaneous failure rate or “hazard,” (b) leads to exponentially distributed system time to failure, and to exponentially distributed component time to failure when components are exposed to the environment in isolation, but (c) does not lead to a prediction of series system failure rate based on the usual procedure of adding component failure rates. If the usual procedure is followed, it is shown that underestimates of system reliability are obtained. A simple spares provisioning problem is investigated when such a model is assumed to hold.