Abstract: In view of problems that traditional risk assessment and reliability analysis methods of power grid focused on relay protection reliability indicators and did not involve change of reliability and actual risk in operation of relay protection device, the paper put forward a method that used three-parameter Weibull distribution to estimate time-varying failure rate, and established Markov model with 10 state based on multiple factors. It obtained time-varying failure rate function model through analyzing and processing data of power grid operation and management by Matlab simulation software; in combination with software and hardware and management factors, it also built process hidden risk assessment system of relay protection device based on Markov model by PSS/E software. The experimental results show that the system can early find and rectify hidden danger in power grid, which improves management level of the power grid, and realizes safe and stable operation of the power grid.