Step 1: Identify the adjective 'familiar'.
Step 2: Recall the prepositions that follow 'familiar'. 'Familiar with' is used when talking about knowing or being acquainted with something (a fact, a subject, a situation). 'Familiar to' is used when someone or something is recognizable to you.
Step 3: Apply the correct preposition for the context. Since the context is knowledge of 'the situation', 'with' is the correct choice.