Growing Geopolitical Uncertainty and Digital Threats Mark Significant Risk Level Increase in 2025

Significant Increase in Geopolitical Risk and Digital Disruption

Recent research by the Institute of Internal Auditors highlights a substantial rise in both geopolitical uncertainty and digital disruption, marking the largest spike in risk levels observed this year. This surge is based on feedback from over 4,000 internal audit experts spanning 131 countries, revealing critical insights into today's risk landscape.

Key Findings

The report, derived from the Internal Audit Foundation's Risk in Focus initiative, outlines that geopolitical risk ratings climbed by ten percentage points, while those concerning technological advancements surged by nine percentage points. Notably, cybersecurity continues to be regarded as the most pressing global risk, with approximately 73% of participants categorizing it within their top five risks.

This data provides a rich and nuanced understanding of how organizational priorities across the globe are evolving in response to emerging threats.

Geopolitical Uncertainty Dominates in 2025

A noteworthy 38% of global respondents identified geopolitical and macroeconomic uncertainties as top-five concerns, reflecting a crucial 10 percentage point increase from last year’s assessments. The scenario is particularly alarming in North America, where 45% labeled it a top risk, soaring 19 percentage points year-over-year. Such significant shifts are likely influenced by rapid alterations in U.S. policy, particularly concerning tariffs and federal funding.

While geopolitical uncertainty has seen considerable traction, it remains low in terms of audit priority, ranking third lowest among 16 assessed risk areas. However, there has been an encouraging rise in audits on this front, which increased by 8 percentage points compared to the previous year. Practitioners are approaching geopolitical risks indirectly, often through associated domains.

Anthony Pugliese, President and CEO of the Institute of Internal Auditors, remarked, “The pronounced jump in geopolitical risk reveals how swiftly the risk landscape is transforming, emphasizing the mounting influence that regulatory shifts have on organizations around the globe.” He emphasizes an essential approach for practitioners: proactively integrating geopolitical risks within the broader context of critical areas such as business resilience and supply chain management.

Cybersecurity and Digital Disruption Trends

Despite shifts in other risk areas, cybersecurity remains the foremost rated global concern, witnessing a slight increase from the preceding year. North America and Europe are spearheading this high-risk rating, likely as a result of enhanced digitization efforts.

On the other hand, digital disruption risks, which include advancements in artificial intelligence, have seen a significant uptick, with 48% listing them among their top five risks—a rapid nine-point rise compared to 2024. The emergence of AI and its implications for cybersecurity are primary elements driving this escalation.

Organizations worldwide are now forming dedicated AI governance groups to oversee the implementation of AI technologies and manage their associated risks effectively. Internal audit teams are also leveraging AI to automate routine processes, enhance efficiency, and furnish vital data to various stakeholders.

Additional Insights

The evolving nature of risk management within internal audit functions indicates mixed alignment with leading risk areas. Currently, the top priorities for internal audit teams globally include:
1. Cybersecurity (69%)
2. Governance and Corporate Reporting (55%)
3. Business Resilience (53%)
4. Regulatory Changes (46%)
5. Financial Liquidity (44%)

Particularly concerning is the disparity between risk ratings and audit priorities. Areas like geopolitical uncertainty (38% risk; 11% audit priority) and digital disruption (48% risk; 32% audit priority) demonstrate that despite their recognition as risks, they are not yet prioritized sufficiently in audits.

Conclusion

As internal audit landscapes continue to adjust, the findings from the Risk in Focus report offer timely and actionable insights for organizations navigating the precarious terrain of geopolitical and digital risks. Enhanced collaboration and strategic adaption towards these emerging threats will remain critical for sustainable organizational resilience.

The Risk in Focus Global Summary, alongside individual regional reports, are accessible through the Risk in Focus Resource Center, serving as a vital resource for internal audit leaders aiming to navigate the complex risks of the contemporary business environment.