Thinking more upon it I am wondering what possible occurrence's could lead to one losing every piece of gear but their PSK and knife while On foot?

Wandering off from camp for what ever reason is just way tooo....Simple? When dealing with people who put their mind to making a PSK and picking a Knife and Considering preparations for survival why would one such individual Not take some form of gear with them? If you Worry about survival enough to make a PSK wouldnt your first understandment is wandering off from camp without proper gear can result in what your preparing for and attempting to avoid?

The only other situations I can Think about is Encountering a Wild animal and using pack to distract it, falling into water, Falling down large hill.

Any Ideas on this?

Sure, a fall could separate you from your pack. You might drop it if menaced by a bear. Certainly when traveling by boat it's easy to envision the scenario.

I guess a simple one would be leaving camp to "use the facilities". Especially at night it's easy to get lost. But I only walked 50 feet! you say. Just backtrack. Except it's dark and you walked the wrong direction. And since you're sure you're close you keep walking...and walking...and walking.

Of course, we're all too smart for that.

I remember reading a story about a couple of college age adults who hiked to top of a cliff they intended to camp near over-night, and then take the return hike back down in the morning.

They get all the way to the top and decide to take their bags off, sit down, and enjoy the sunset. One guy accidentally got his foot hung up in the strap of another guy's bag. Not realizing it, when he got up, his foot flung the bag over the side of the mountain. Unfortunately, loosing all his buddies gear.

Luckily for them, it was only an inconvenience. However, something like that could easily take a turn for the worst.

The basic idea behind a small PSK (like the candy tin versions) is that it should be something small and light enough that it's always on your person. That way, if you do somehow loose your pack, you've got something. I mean, a tiny knife and a few matches is better than no knife and no fire-starting gear.

Personally, I don't carry one (as I feel my EDC is substantial enough with significant redundancy). However, I think it's a sound idea for a lot of people. Kids and teens especially. They might leave their bag behind, they might forget to take their pocketknife and fire-starting gear, they might lose their PSK out of their pocket....but the chances of all three happening are much slimmer than the chances of one or even two happening.

I think this highlights the difference between survival kit and being properly equipped in my mind. On a day hike, being properly equipped might mean having a survival bag (or whatever) in your rucksack in case of a problem. The survival kit is what you have when you lose your bag.

Losing the majority of your kit is a rarity, and I think the most likely situations are covered here already.

I would point out that a lot of our survival planning seems to assume we are mobile. If we lose that mobility you don't need to be very far away from your kit to not be able to reach it - a relative of mine broke her leg badly by slipping on some wet grass a few years back - happily there were passers by to help her, but she struggled to cover any distance before they got to her. In the dark and wet....I think a whistle, light and space blanket might make all the difference in your pocket

There is still another way to look at it
You may not even lose your bag to need the PSK

It happened several times that someone is stranded and the stuff in their bag is consumed before they are found. It is a relief that they still have something else (the PSK)

A few decades ago, I used to drive a motorbike. It didnt have a fuel gauge , but rather a valve under the fuel tank. In position zero it was closed. in position 1, the engine has access to about 90% of fuel in the tank. When motorbike engine shuts down for lack of fuel. I twist the valve to position 2 to access the last 10% of fuel and head directly towards a gas station.

So, a PSK can help you if your main supplies run out, and give you "another chance".

I spent a couple of fairly rough days looking (successfully, as it turned out) for a young lady who had been collecting firewood for her group's picnic campfire. We found her several miles and a few thousand feet below her point last seen after an extremely dark and stormy night had passed. She did not have her pack, or much of anything else with her.

one could easily lose their pack in a stream crossing gone bad, or in exiting a helicopter/plane "hard landing". Firefighters retreating from a flareup have been known (rightly) to jettison all their gear

Good points! Another reason to carry a kit that fits in your pocket.

A common scenario we hear about is the lost hunter. They get so focused on following their quarry, that they fail to pay attention to their surroundings and end up lost. Ditto the firewood gatherer, washroom seeker, photographer......

I'd argue that the same thing could happen pretty easily to someone responding to a child. "Hey mom, come see this!" or the sound of your child in distress in the distance, could turn into an unexpected ramble away from camp, and that could easily end up with someone becoming seperated from their pack.

From personal experiences:
1) Thrown from a horse on a hunting trip. Horse ran off with everything I didn't have in my pocket or on my belt.
2) I got bounced out of a raft in white water and my survival kit (in a waist/fanny type pack) got caught in a snag preventing me from getting back in the raft. I had to ditch it or drown.

Lessons learned: 1)PSP UNDER an undershirt (neck wallet) or in pants pocket. 2) Shoot all horses, and walk.

Read about folks who've hiked the Continental Divide. There was the fellow who took a night stroll to go water the flowers and couldn't find his way back to his tent in the dark.

He spent a very cold night waiting for sunrise.