> How are system failures handled?

By prayer. It happened a couple times, although not yet on the city scale.

I don't personally know anyone who was affected. What they did, according to the local press, was stuffing every crack and cranny with old rags and sleeping fully clothed (as in fur coats and the like) and under as many blankets as they could get their hands on.

If temperatures frequently get below -30C in the winter, one would think that getting a proper sleeping bag rated for that would be a no brainer.

It's extremely rare for heating to fail. I don't know of anyone who would've prepared specifically for this in Nordic countries.

It's not only for heating to fail. If your car breaks down in the middle of nowhere you could be in for a bad time if you cannot stay warm.

It's standard advice to keep blankets or the like in your car for this specific scenario. Besides, for the majority of people in the Nordic contries, their normal winter comforter is warm enough to keep them warm should the heating fail.

I had to go to one of these cold places once for a couple of weeks. The car I was given was a modified Toyota Land Cruiser with two 100 liter tanks, additional insulation, additional battery inside, Webasto heater for both inside and engine compartment. It was also stocked with some useful stuff in case you do get stuck out in the middle of nowhere.

Those people were ready, when you live your whole life in such environments you quickly get "infused" with a lot of experience that was accumulated over generations.

So I'd be more worried about people in a regular country getting severe low temp weather than a failing heating system in one region used to extreme cold.

That is normal advice for the UK even in the part wear heavy snow is rare.