You cannot treat a risk you have not found. Risk managers use several methods to identify loss exposures. Each method has a blind spot, so they are usually combined.
Standard survey questionnaire (checklist): quick and organized, but it may miss exposures that are unusual for that business.
Financial statement analysis: the balance sheet and income statement tie exposures to dollar values, but some exposures never appear on the books, such as borrowed property or a possible lawsuit.
Flowchart analysis: maps how materials and work move through an operation, so it reveals bottlenecks and dependencies, such as one supplier feeding every product line. It shows where a loss could interrupt the process, not how large it would be.
On-site physical inspection: lets the risk manager see real conditions and talk with the people doing the work, but it takes time and money and can miss what cannot be seen, such as liability assumed in a contract.
Contract analysis: reviews leases and other agreements for liability the business has assumed or transferred.
Loss history analysis: past losses show patterns, but the method depends on losses that have already happened.
Exam tip: questions usually describe a method and ask for its name, or name a method and ask for its weakness. Match each method to its blind spot.