Speaking to Sky News Mr Parry said: “It could have become entangled in the wreckage of the Titanic. It could indeed have had a catastrophic failure.”
The submarine, which is capable of travelling down to the famous wreck, reportedly lost contact with the mother ship an hour and 45 minutes into a dive on Sunday morning.
The US Coast Guard has confirmed that the craft, which has five people on board, has now been missing for more than a day.
While getting stuck in the wreckage of the Titanic is one of the worse case scenarios, Mr Parry said there were other potential outcomes.
Mr Parry said: “I mean there’s an optimistic option that is either they lost an umbilical connection with the surface or indeed there’s been a malfunction and the submarine is continuing to operate but obviously out of contact with its mother ship.”
Mr Parry added: “The answer is we don’t know just yet. What we do know of course is the wreck site is off the Grand Banks and a long way from anywhere. The nearest rescue facilities will be on the east coast of the US.
“It’s a very difficult operation. The actual nature of the sea bed is very undulating. The Titanic herself lies in a trench.
“There’s lots of debris around so trying to differentiate with sonar in particular and try to target the area you want to search in with another submersible will be very difficult indeed.”
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Mr Parry said that there was just one hope for the missing crew, among them British businessman Hamish Harding, and that would be if the mother ship had a spare submarine.
He said: “The only hope I think one has is that the mother ship will have a standby craft that can actually go down and investigate immediately.
“Any responsible organisation would have another submersible ready in under an hour’s notice to go down and see what’s happened.
“I’m afraid if we’re talking about an operation from the east coast of the state, I would think anywhere up to a couple of days to get there before they can even start looking.”
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In a statement, OceanGate Expeditions said: “We are exploring and mobilising all options to bring the crew back safely. Our entire focus is on the crewmembers in the submersible and their families.
“We are deeply thankful for the extensive assistance we have received from several government agencies and deep-sea companies in our efforts to reestablish contact with the submersible. We are working toward the safe return of the crewmembers.”
Experts say finding the missing submarine will be incredibly difficult due to the harsh environment and immense pressure of depths at which the submarine may have gone.
OceanGate charges individuals $250,000 (£195,586.25) per person to travel down to the Titanic.
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