Multiple studies have shown that biodiversity loss can impair ecosystem processes, providing a sound basis for the general application of a precautionary approach to managing biodiversity. However, mechanistic details of species loss effects and the generality of impacts across ecosystem types are poorly understood. The functional niche is a useful conceptual tool for understanding redundancy, where the functional niche is defined as the area occupied by a species in an n-dimensional functional space. Experiments to assess redundancy based on a single functional attribute are biased towards finding redundancy, because species are more likely to have non-overlapping functional niches in a multi-dimensional functional space. The effect of species loss in any particular ecosystem will depend on i) the range of function and diversity of species within a functional group, ii) the relative partitioning of variance in functional space between and within functional groups, and iii) the potential for functional compensation (degree of functional niche overlap) of the species within a functional group. Future research on functional impairment with species loss should focus on identifying which species, functional groups, and ecosystems are most vulnerable to functional impairment from species loss, so that these can be prioritized for management activities directed at maintaining ecosystem function. This will require a better understanding of how the organization of diversity into discrete functional groups differs between different communities and ecosystems.