Security experts said a table-top exercise, called Operation Sherman, specifically highlighted the City Room foyer - the area where Salman Abedi detonated the bomb - as a target for an attack.
At the time of the 2017 bombing, the UK terror threat level was severe, meaning an attack was "highly likely".
Colonel Richard Latham, a security expert commissioned by the inquiry, said the threat of an attack "should have been crystal clear", particularly in the foyer which had the highest "rate of footfall".
He added that an attack outside the arena was more likely than one inside due to security at the door.
David Bamaung, a former police officer who worked as a counter-terrorism security advisor in Glasgow, said "there was a material risk" of an attack.
However, there was no joint plan in place between SMG - the arena operator - and the British Transport Police, who patrolled the area, about how to deal with the threat of an attack.
The inquiry heard SMG refused to accept sole responsibility as it believed it "shared" responsibility for security in the foyer area with police due to it being a "public space".
On the night, British Transport Police were tasked with patrolling the foyer but were in nearby Victoria Station for most of the hour when Abedi had been waiting for the concert to end.
Two members of ShowSec, the company delivering security on behalf of SMG, had their attention drawn to the bomber, but did nothing to intervene.
The company told the inquiry that its staff were "casually employed, moderately paid and from different backgrounds with a range of experience."
Mr Bamaung said: "Our understanding is there was no formal agreement and possibly a lack of appreciation of each other's role."
He said he would have expected BTP to have had a presence in the City Room "throughout the night" for "security and for public reassurance as people leave the event."
He added the foyer area was "where there was the largest congregation of crowds when leaving the event".