Risk Identification
What the exam tests
Risk Identification tests whether you can find exposures before they become claims. The exam favors scenario questions that ask which exposure is missed, which identification tool fits, and whether a contract or certificate actually transfers risk.
Core rules
- Organize the search by asset and activity: people, property, liability, income/time element, crime, cyber, auto, environmental.
- Use multiple tools: exposure questionnaires, site inspections, flowcharts, financial statements, contracts, loss runs, employee interviews, and industry benchmarks.
- For property, use COPE: Construction, Occupancy, Protection, Exposures. A frame building with wood-frame additions, a restaurant occupancy, no sprinklers, and adjacent flammable storage presents a different exposure than a masonry office.
- For liability, review operations, products, completed operations, contracts, advertising, and employment practices.
- Read contracts for indemnity, insurance requirements, additional insured status, waiver of subrogation, and notice deadlines.
- Loss runs show past claims but miss uninsured losses and near misses; near misses are free lessons.
Worked example
A 120-seat restaurant adds delivery and a small bar. Identification should list slip-and-fall, foodborne illness, liquor liability, kitchen fire, business income loss, employee injury, delivery auto, cyber, and employment practices. The delivery exposure brings auto liability and hired/non-owned auto; the bar brings liquor liability and assault-and-battery exclusions. The kitchen brings grease-laden vapor and suppression-system impairment. A certificate from the delivery contractor is not identification of the restaurant's own exposure - it is evidence of a possible transfer, and only if the endorsement and contract match.
Traps that cost marks
- Identifying property exposures only and missing time-element and liability losses.
- Treating a certificate of insurance as proof that risk has been transferred.
- Relying on policy declarations or renewal forms as the sole identification method.
- Ignoring contractual liability and completed operations.
Key points
- Identify by people, property, liability, income, crime, cyber, auto, and environment.
- COPE structures property exposure facts.
- Contracts create liability exposures as well as transfer opportunities.
- Loss runs are backward-looking; near misses reveal future claims.