Top Areas of Risk for 2025 Internal Audit Planning

Internal audit teams play an important role in identifying and assessing the most significant risks to their organizations. In 2025, the rapidly changing risk landscape likely will present evolving risks in key areas, including more dynamic cyberthreats, financial complexities, strategic imperatives, shifting workforce dynamics, and the impetus of digital transformation.

Effectively addressing emerging risks is critical for organizations to safeguard assets, maintain operational efficiency, and gain competitive advantage. Following are some key risk categories that internal audit functions should follow closely during the year ahead to help foster resilience and sustainability in the face of volatility.

Artificial intelligence

Like other risks, artificial intelligence (AI) represents both a threat and an opportunity to the long-term viability of growth strategies. As organizations accelerate their digital transformation efforts, AI has emerged as a key driver of innovation, efficiency, and competitive advantage.

However, the rapid integration of AI into existing technology environments brings significant challenges. The complexity of AI can strain IT infrastructure and lead to operational inefficiencies, higher maintenance costs, and the risk of system failures. Legacy systems often struggle to integrate with new AI technologies, which might result in inaccurate or biased outputs because of incomplete, inaccurate, or biased inputs, which can create workflow disruptions and integration issues.

Without well-defined AI governance and controls, AI implementation and use might become misaligned with business objectives, result in security breaches or loss of intellectual property, waste resources, and miss strategic opportunities and efficiencies.

Potential internal audit efforts for 2025:

• AI governance assessment. Evaluate the organization’s design and implementation of AI governance, including policies, procedures, training, controls, and monitoring against the use of unauthorized, public, and unsecured AI tools. Align with strategic objectives, ethical standards, and regulatory requirements.
• Data management. Assess the current state of data management processes and controls in the organization to confirm that complete and accurate data is in the organization’s IT environment for AI consumption and use.
• AI security assessment. Evaluate security controls specific to AI systems, including protections against data poisoning, unwanted bias in AI results, adversarial attacks, and unauthorized access to AI models and datasets.
• AI model assessment. Review processes for AI model development, testing, validation, and deployment to confirm they meet quality, reliability, and fairness standards. Perform ongoing monitoring for bias and performance degradation.

Cyber risk

Cybersecurity has long been a significant risk and top of mind for management and boards, and we anticipate it will play a continually increasing role in the risk landscape.

As organizations across industries increasingly rely on digital infrastructures and external partnerships, the landscape of cyber risks continues to evolve. That evolution creates challenges for safely navigating a complex ecosystem of threats that affect operations, security, and financial well-being. These threats include three critical risk areas – cloud security, third-party vulnerabilities, and malware and ransomware threats – that require robust cybersecurity strategies to protect sensitive data and maintain operational resilience.

Potential internal audit efforts for 2025:

• Cyber maturity. Assess the maturity of management’s processes and controls to prevent, detect, respond to, and manage cyber incidents, using one or more industry-recognized frameworks.
• Cloud governance. Assess the organization’s cloud governance framework, strategy, policies, procedures, and governing committees.
• Cloud service providers. Evaluate the risk assessment and due diligence processes, systems, and controls when selecting, onboarding, and monitoring a cloud service provider and assess the adequacy of management’s evaluation of the service providers’ security controls, contractual compliance with key confidentiality and data security provisions, and incident response.
• Incident response review. Review the resilience and adequacy of incident response after a security event.
• Security awareness. Assess the organization’s security awareness training programs for employees and third parties.
• Attack and penetration. Conduct an independent attack and penetration assessment to identify key vulnerabilities in the organization’s security controls.

Economic uncertainty

Amid economic uncertainty for 2025, organizations across various industries likely will encounter rising operational costs, intensifying competition, and evolving environmental, social, and governance requirements, which could universally affect business operations. Volatile economic conditions make it even more necessary for real-time, data-driven insights, operational resilience, and flexibility for prompt course adjustments with purpose and foresight.

Potential internal audit efforts for 2025:

• Data analytics and modeling of trends assessment. Review financial planning and budgeting processes to assess their effectiveness in planning for and adjusting to changes in market trends and resource needs and to make sure they align with organizational and strategic objectives.
• Financial planning and budgeting review. Review financial planning and budgeting processes to effectively plan for and nimbly adjust to dynamic resource needs and allocations in alignment with organizational objectives and anticipated, yet changing, market and economic trends and demand.
• Supply chain resilience audit. Assess the resilience of the organization’s supply chain to weather key risks that could halt or significantly slow the organization’s ability to meet customer demands. Assess supply chain operations and contingencies for withstanding disruptions and maintaining continuity in service delivery.
• Business continuity and disaster recovery audit. Assess business continuity and disaster recovery plans and tests to enable prompt continuity of operations and to avoid interruption in achieving core organizational objectives.
• Governance, risk, and compliance audit. Assess the effectiveness of governance structures, risk management practices, and compliance with regulatory requirements to safeguard organizational integrity.

Workforce management

The dynamics of managing a motivated and skilled workforce have become more challenging – and more critical – for sustaining competitive advantage and ensuring operational efficiency amid economic uncertainties.

Given complexities that organizations likely will encounter in 2025, effective workforce management should be considered a critical determinant of business success across industries. Anticipating challenges, such as headcount reductions, budget constraints, and talent misalignment, companies should proactively devise strategic approaches to attract, retain, and engage their workforce.

Potential internal audit efforts for 2025:

• Workforce planning. Evaluate the organization's strategies for workforce planning to assess alignment with business goals and effective management of human resources.
• Talent retention. Assess the effectiveness of current retention strategies and identify areas for improvement to maintain a stable and skilled workforce.
• Incentive compensation. Examine the structure of incentive compensation programs to confirm they motivate and reward employees appropriately, ethically, and in alignment with the organization’s strategic objectives.

Strategy and innovation

Because of rapid technological advancements, evolving consumer expectations, and fierce global competition, the imperative for organizations to innovate is more pronounced than ever. Shifting economic landscapes and increasing geopolitical uncertainties compound these challenges and add layers of complexity to strategic decision-making. The acceleration of digital transformation, fueled by technologies such as AI and the internet of things (IoT), is reshaping market dynamics and operational frameworks in ways that demand agility and foresight.

To maintain a competitive edge, organizations will need to navigate these technological changes and adapt to political shifts that can affect global trade, regulatory environments, and economic stability. Organizations should make innovation a strategic focus and foster a culture that supports continual evolution, adaptation, and resilience in response to external uncertainties.

Potential internal audit efforts for 2025:

• Strategic planning and scenario analysis. Evaluate the organization's strategic planning processes and scenario analysis capabilities to validate preparedness for future uncertainties and market changes.
• Innovation and development investments. Assess the allocation and effectiveness of resources dedicated to innovation and development to verify alignment with strategic goals.
• Innovation readiness assessment. Assess the capacity to innovate, implement innovations, and adapt to technological changes.
• Strategic partnership and collaboration review. Analyze existing partnerships and alliances with third parties to enable achievement of objectives while mitigating risks. Engage third parties for innovation and strategic gains and demonstrate that they support innovation and growth objectives.
• Workforce upskilling and development audit. Review efforts to enhance employee skills and capabilities to meet evolving business and technological demands in areas of strategic and innovation priority for the organization.
• Leadership practices and culture of innovation. Assess the effectiveness of leadership practices and the cultural environment and tone to foster innovation, ideation, and adaptability.

Digital transformation

When organizations embark on the digital transformation journey, they face the dual challenge of seizing the opportunities presented by emerging technologies and managing the inherent risks that accompany them. In 2025, technological innovations, such as generative AI, IoT security, and autonomous mobility, continue to redefine industries and business operations.

Alongside these advancements, the rapid integration of AI into existing IT environments introduces significant challenges, including complexity, strain on infrastructure, and security vulnerabilities. In addition to internal audit’s involvement in assessing risk through internal audit projects, it will be critical for internal auditors to stay current with technological advancements and regulatory changes, which involves continual learning and participation in industry forums and conferences.

It will also be critical to foster collaboration among internal audit, IT, and other departments to support a holistic approach to risk management and share insights and leading practices for managing emerging technology risks.

Potential internal audit efforts for 2025:

• Risk assessment. Conduct comprehensive risk assessments to identify and evaluate the potential impact of emerging technologies on the organization, including understanding the specific risks associated with each technology and the implications for business operations.
• Process and design of controls for new technology. Evaluate controls before and after implementation to confirm that identified risks for the new technology are effectively mitigated both from a business perspective as well as an IT risk management perspective.
• Training and awareness. Provide training and awareness programs to help the organization understand the risks associated with emerging technologies as well as their role in mitigating these risks.
• Continuous monitoring. Establish continuous monitoring mechanisms to detect and respond to emerging threats in real time and use advanced analytics and AI-driven tools to enhance monitoring capabilities.