The success of incident reporting in improving safety, although obvious in aviation and other high-risk industries, is yet to be seen in health-care systems. An incident reporting system which would improve patient safety would allow front-end clinicians to have easy access for reporting an incident with an understanding that their report will be handled in a non-punitive manner, and that it will lead to enhanced learning regarding the causation of the incident and systemic changes which will prevent it from recurring. At present, significant problems remain with local and national incident reporting systems. These include fear of punitive action, poor safety culture in an organization, lack of understanding among clinicians about what should be reported, lack of awareness of how the reported incidents will be analysed, and how will the reports ultimately lead to changes which will improve patient safety. In particular, lack of systematic analysis of the reports and feedback directly to the clinicians are seen as major barriers to clinical engagement. In this review, robust systematic methodology of analysing incidents is discussed. This methodology is based on human factors model, and the learning paradigm which emphasizes significant shift from traditional judicial approach to understanding how 'latent errors' may play a role in a chain of events which can set up an 'active error' to occur. Feedback directly to the clinicians is extremely important for keeping them 'in the loop' for their continued engagement, and it should target different levels of analyses. In addition to high-level information on the types of incidents, the feedback should incorporate results of the analyses of active and latent factors. Finally, it should inform what actions, and at what level/stage, have been taken in response to the reported incidents. For this, local and national systems will be required to work in close cooperation, so that the lessons can be learnt and actions taken within an organization, and across organizations. In the UK, a recently introduced speciality-specific incident reporting system for anaesthesia aims to incorporate the elements of successful reporting system, as presented in this review, to achieve enhanced clinical engagement and improved patient safety.