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Recent advances in wireless technology facilitating Vehicle-to-Vehicle (V2V)communication has paved the way towards a more connected and Cooperative-Intelligent Transportation System (C-ITS). It has unveiled the possibility of many services which are anticipated to make the road transport eco system safer, cleaner, and more sustainable. Platooning is one such application that is expected to soon appear on the roads. In platooning, a group of connected and highly automated vehicles follow a lead vehicle with short inter-vehicle distances. They adapt their speed, acceleration, steering angle, etc., with the help of on-board sensors and inter-vehicle communications. Due to the highly automated driving and the very short inter-vehicle distances required to achieve fuel-efficiency, platooning is a complex and safety-critical system of systems. As a result, the consequences of component or system failure can endanger human life, cause damage to property, or the environment. Given that V2V communication is subject to packet losses due to interference, path loss, fading and shadowing, it is usually desirable to maintain a sufficient level of platooning functionality without compromising safety also during periods of transient errors. Moreover, a platoon can experience different sensor failures, permanent hardware/software failures, or a suddenly appearing road hazard,e.g., a moose. The platoon should, therefore, also be capable of dissolving and transitioning into a fail-safe state by performing emergency braking, safestop, or manual handover without causing any harm to the equipment, people, or to the environment. This research work focuses on incorporating fail-operational mechanisms in platooning in a fuel-efficient and safe way, even inthe presence of transient errors and enable transition into a fail-safe state inthe event of an emergency. To this end, a platoon runtime manager is proposed, which monitors the channel quality and keeps the platoon operational in cases of temporal failures by degrading the platoon performance to the level at which it will remain acceptably safe. Simulation results demonstrate that the runtime manager can avoid collisions in the platoon and still maintain fair performance in terms of fuel-efficiency by either adjusting the inter-vehicle distances or switching to a different controller during runtime. Furthermore, two emergency braking strategies, namely Synchronized Braking and Adaptive Emergency Braking, are proposed to address the emergency events that can arise while platooning. These braking strategies are compared to several state-of-the-art braking strategies in terms of their ability to avoid collisions, and the distance traversed by the lead vehicle. Simulation results show that Synchronized Braking and Adaptive Emergency Braking strategies can ensure fail-safe platooning while the other braking strategies fail to do so. Moreover, a simulation tool named PlatoonSAFE has been developed to facilitate the evaluation of fail-operational and fail-safe mechanisms in platooning under realistic traffic, vehicle dynamics, and communication scenarios.