A time-varying and condition-based component outage model is needed for operation risk assessment， which should consider the change of weather， aging degree and other operation conditions. Various existing definitions of the failure rate， the hazard rate and their relation are well analyzed. The relationship between the failure rate in Poisson process model and the state transition rate in Markov process model is presented. The conditions and the method to formulate component outage models using Markov process in time-varying condition are introduced. Based on the above research， in can be concluded that Markov model is fit for overhead transmission lines and the non-Markov model must be used for transformers. Finally， two different time-varying component outage models for overhead transmission line and transformer are developed respectively. The numerical examples are also presented.