A scalable and fault tolerant finite state machine engine, for example, for use in an automated incident management system, logs or records data in persistent storage at different points or levels during various internal processing of an event associated with an information technology element, and action taken associated with the event, by executing a finite state machine instance that encodes policies for handling incidents on such types of information technology elements. In the event that the finite state machine engine is shutdown during processing, the finite state machine engine is able to pick up from where it left off when it was shutdown, for each abnormally terminated finite state machine instance, by using the data logged in the persistent storage and determining a point of processing from where it should continue its execution.