Top Risks for Internal Audit Teams in 2025: Navigating an Evolving Risk Landscape

As organizations face an increasingly dynamic environment, internal audit teams must stay ahead of emerging risks to protect the integrity, resilience, and sustainability of their organizations.

In 2025, the risk landscape will be shaped by technological advances, regulatory shifts, and heightened expectations for sustainability and social responsibility. Internal audit teams must adapt to these changes and identify key risks, with a focus on the long-term implications of these emerging challenges.

Drawing insights from the Institute of Internal Auditors (IIA), Risk in Focus 2025, and other industry sources, we highlight the critical risks internal audit teams should be alert to as they navigate this evolving landscape.

1. Cybersecurity and data privacy risks in a digital world

With the rise in digital transformation, cybersecurity risks are among the significant threats internal audit teams should monitor. The IIA's 2025 Global Summary Risk in Focus report identifies cybersecurity as a top concern for internal auditors, with a global average of 75%, ranking it among the top risks organizations face.

The growing threat of cyberattacks, especially through ransomware, data breaches, and supply chain vulnerabilities, places immense pressure on internal auditors to ensure robust controls are in place.

Key Risks:

• Ransomware and Data Breaches: Cyberattacks, including ransomware and data breaches, are becoming more frequent and complex. Organizations, especially those using cloud-based systems, are highly vulnerable to these types of attacks.
• Data Privacy: Internal auditors must ensure that organizations comply with evolving data privacy laws, such as Uganda's Data Protection and Privacy Act of 2019 and the Data Protection and Privacy Regulations of 2021. Non-compliance can result in penalties and reputational damage.
• Cloud Security Risks: While cloud adoption offers benefits, it also brings risks related to data storage, accessibility, and managing third-party vendors.

Internal Audit Action Plan:

• Continuously audit cloud security settings, access controls, and cybersecurity measures.
• Update cybersecurity assessments regularly to stay ahead of emerging threats.
• Ensure compliance with data privacy laws and assess the risks posed by third-party cloud providers.

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2. Artificial Intelligence and Automation Risks

The increasing integration of artificial intelligence (AI) and automation in business operations brings both opportunities and risks. AI technologies, while improving efficiency, introduce new challenges around governance, ethics, and compliance. The IIA highlights that AI-related risks are now among the top concerns for internal audit teams.

AI Related Risks.??????????

• Algorithmic Bias and Transparency: AI systems should be regularly checked to ensure they are fair and transparent. There is a risk of AI models unintentionally being biased, which could lead to unfair outcomes in areas like hiring, banking, healthcare and consulting.
• Autonomy and Accountability: As automation systems become more independent, it is important to ensure there are clear rules on who is responsible for decisions made by AI. Internal audit teams must assess whether these accountability structures are in place.

Internal Audit Action Plan:

• Regularly audit AI systems to ensure fairness, transparency, and no bias.
• Build expertise in auditing AI, focusing on high-risk areas like decision-making systems.
• Ensure compliance with both local and international AI regulations and establish strong governance for AI use.

3. Third-party and supply chain risk management (Nth Party Risk Management)

With the increasing reliance on third-party vendors and global supply chains, internal auditors must assess risks arising from third-party relationships. The IIA’s Global Risk in Focus 2025 report highlights third-party risk management as one of the top concerns, particularly as businesses become more dependent on external providers.

Over the years, the discussion on third-party risk management, has been on the rise, interesting to learn is that 3rd-party risk management has evolved into 4th, 5th, 6th …. and Nth Party Risk Management. All these are within the ambit of supply chain management.

Key Risks:

• Vendor dependency: Over-reliance on third-party suppliers, especially in critical business areas, can lead to significant operational disruptions in case of a vendor failure, cyberattack, or regulatory issue.
• Emerging technology risks in third-party systems: As vendors integrate more advanced technologies like AI, blockchain, and cloud services, internal auditors must assess the risks tied to these technologies, such as data security and ethical concerns.
• Sustainability and ESG compliance: The growing emphasis on environmental, social, and governance (ESG) practices means that organizations need to ensure their third-party vendors meet ESG standards. Non-compliance could lead to reputational damage or regulatory penalties.

Internal Audit Action Plan:

• Regularly assess and update third-party and nth risk management frameworks to incorporate emerging technology and ESG considerations.
• Evaluate the stability and resilience of key suppliers, especially those involved in critical business functions.
• Ensure vendors comply with environmental and social standards, especially as regulatory frameworks tighten.

4. Talent Management and Internal Audit Skill Gaps

The complexity of modern risks, such as those posed by digital technologies and AI, necessitates a skilled and adaptable internal audit team. Internal audit teams face growing challenges in recruiting and retaining talent with the necessary technical expertise to audit emerging technologies effectively.

Key Risks:

• Skills Gaps: As technology evolves, the skills required to assess emerging risks such as AI, cloud computing, and blockchain are becoming increasingly specialized. A lack of expertise could hinder the internal audit’s ability to identify critical vulnerabilities.
• Adapting Audit Methodologies: Traditional audit approaches may not be suited to the rapid pace of technological change. Audit methodologies need to evolve to address the risks posed by complex technologies.

Internal Audit Actions:

• Invest in continuous technical training and upskilling for audit professionals to build expertise in emerging technologies.
• Develop new audit methodologies specifically designed for auditing modern, complex technologies and their associated risks.
• Foster a culture of continuous learning and adaptability within the internal audit team to ensure they can respond to evolving risks.

Conclusion

In 2025, the role of internal audit teams will be more critical than ever as they confront a rapidly evolving and increasingly complex risk landscape. From cybersecurity threats to regulatory compliance, sustainability challenges, and technological risks, internal audit teams must adapt and refine their strategies to address emerging risks effectively.

By focusing on technology, regulatory compliance, third-party risks nth party risks, and ESG considerations, internal audit teams can ensure their organizations remain resilient and well-positioned for future success. As emphasized by the Institute of Internal Auditors (IIA) and other industry reports, internal audit is essential in helping organizations navigate these complexities, ensuring that risks are identified, mitigated, and managed proactively.