When it comes to tools (dies, punches, etc.), breakage or chipping is ususally a toughness issue. Deformation (mushrooming) at the working surface is a hardness isssue. If the breakage is a result of deformation, then it's hardness. S7 is just about the best tool steel you can buy in terms of toughness. At 42Rc, you should have excellent toughness.
Here comes the barrage of questions:
-Is this a recurring problem, or an anomaly?
-Is this riveter a new design or something that has been in use for a while?
-Is the riveter unique to your company/application, or are there similar machines in use elsewhere, if so do they see this type of failure?
-Did you do any metallurgical investigation of the failure?
-Is the part double tempered?
Here's the biggie:
-Are you cutting threads after hardening, and if so did you do a stress relief?
Depending on the metal producer and manufacturing process used, there may be non-metallic inclusions from which failure originated (the anomaly). There may also be unusual stress risers inherent in the design, or unpredicted forces acting on the part. Perhaps the configuration has to be "beefed up" to deal with unknown/unconsidered forces. Do you have any pictures of the failure?