Palo Alto Networks Prisma SD-WAN is designed to maximize application availability and performance. When all available active paths for an application fail to meet the criteria defined in a Path Quality Profile (SLA), the system does not drop the traffic. Instead, it enters a "best-effort" mode. It will select the path that is performing the best relative to the others, even though it technically violates the configured threshold. In this scenario, it would choose the active path with the lowest packet loss (e.g., 1.5% loss over a path with 2% loss) to maintain connectivity and minimize the impact on the application. This ensures graceful degradation rather than a complete service outage.

A. Dropping traffic is a last-resort action and contradicts the primary SD-WAN goal of ensuring application resiliency and high availability.

C. Queuing traffic indefinitely is not a viable network strategy, as it would lead to severe latency, buffer exhaustion, and application timeouts.

D. A Backup path is used if it is available and meets the SLA. However, the fundamental behavior when all paths are degraded is to choose the "best of the worst," which could still be an active path.

1. Palo Alto Networks Prisma SD-WAN Administrator's Guide: In the section "Define Application Path and Quality Policies," the guide specifies the system's behavior for path selection. It states, "If no path meets the policy requirements, Prisma SD-WAN forwards the traffic on the best available path based on the path selection criteria." This directly supports the principle of selecting the "best of the worst" path. (Reference: Prisma SD-WAN Administrator's Guide, section on Application Path and Quality Policies).

2. Palo Alto Networks Prisma SD-WAN Design Guide: The design guide elaborates on failover and brownout scenarios. It explains that the system is designed to always forward traffic if a path is available, selecting the one that most closely aligns with policy objectives even during periods of degradation, which prevents "black-holing" traffic when all links are performing poorly. (Reference: Prisma SD-WAN Design Guide, section on High Availability and Path Failover).