Top Risk Areas for Internal Audit Planning: Energy

Explore five key risks facing energy companies in 2027 and how internal audit planning can help organizations address them. 

As energy companies prepare for 2027, they face growing risks from interconnected infrastructure and long-term capital investments as demand, regulation, technology, and geopolitical conditions shift.

Five areas warrant greater attention in internal audit planning:

• Operational technology (OT) and industrial control systems (ICS) cybersecurity: Critical systems and connections require comprehensive inventories, access controls, threat monitoring, and recovery plans that account for vendor and remote access.
• Grid reliability and demand growth: Rising electricity demand requires careful evaluation of load forecasts, resource adequacy assumptions, interconnection plans, and operational readiness to support large new loads.
• Capital project delivery: Effective project oversight depends on sound approval processes, reliable cost estimates, contractor controls, change order management, and schedule monitoring.
• Regulatory and permitting uncertainty: Companies need processes to track regulatory changes, evaluate potential scenarios, manage compliance obligations, and maintain documentation supporting incentives and permits.
• Geopolitical risk and energy security: Concentrated supply sources, critical transit routes, commodity price volatility, and potential operational disruptions create exposures that warrant closer scrutiny.

Internal audit can help boards assess whether management’s assumptions, controls, and contingency plans adequately address these interconnected risks and whether early warning indicators prompt timely action.

OT and ICS cybersecurity and critical technology infrastructure

Energy operations increasingly depend on connections among control centers, plants, substations, pipelines, terminals, field devices, cloud platforms, equipment manufacturers, and remote support providers. Those connections improve visibility and performance, but they also create paths through which compromised credentials, an unmanaged asset, a vulnerable vendor, or a poorly controlled change can reach systems that control physical processes. The result could be an outage, unsafe operating conditions, an environmental release, equipment damage, or loss of critical infrastructure availability.

In its “Secure Connectivity Principles for Operational Technology” report, the Cybersecurity and Infrastructure Security Agency emphasized that every connection should have a defined business requirement, minimum necessary access, secure design, and ongoing monitoring. Internal audit should test whether those principles are operating in practice, including for assets outside the narrow scope of a compliance program. Because safety and availability constraints can limit conventional scanning or patching, exceptions should be visible, time-bound, and supported by tested compensating controls.

Next steps for internal auditors

• Asset inventory and architecture. Validate a complete, risk-ranked inventory of OT assets, software, network paths, external connections, and accountable owners.
• Access and segmentation. Test network boundaries, privileged access, multifactor authentication, jump hosts, vendor sessions, and rapid revocation.
• Vulnerability and change management. Assess discovery, risk-based patching, compensating controls, and approval of logic or firmware changes.
• Detection and response. Confirm that monitoring covers relevant protocols and rehearse scenarios.
• Recovery and third parties. Verify offline backups, restoration tests, manual workarounds, supplier obligations, and replacement-equipment plans.

Grid reliability resource adequacy and demand growth

The North American Electric Reliability Corp., in its “Long-Term Reliability Assessment,” forecasted 224 gigawatts of summer peak-demand growth and 246 gigawatts of winter growth over 10 years, with 13 of 23 assessment areas facing resource-adequacy challenges. Data centers and other large loads can request service faster than generation, transmission, substations, fuel arrangements, and interconnections can be planned and built. Forecast error can therefore create reliability exposure, stranded investment, cost-allocation disputes, or delayed customer connections.

In its July 2026 order on computational load integration, the Federal Energy Regulatory Commission also pointed to the operating characteristics of large computational loads, not only their total demand. Internal audit should examine how commercial commitments, planning models, operating procedures, and capital decisions use a consistent and sufficiently conservative view of new load. Reviews should also consider who bears upgrade costs and curtailment risk when forecast demand, connection timing, or facility performance differs from the approved case.

Next steps for internal auditors

• Resource adequacy. Challenge scenarios for extreme weather, unit outages, and fuel constraints.
• Transmission and interconnection. Review queue assumptions, network-upgrade dependencies, cost allocation, and escalation of slippage.
• Large-load operations. Assess voltage sensitivity, curtailment rights, demand response, and coordination with customers and system operators.
• Emergency readiness. Test load-shed plans, communications, mutual assistance, restoration priorities, and lessons learned from exercises and reliability events.

Capital projects and infrastructure delivery

Energy companies are pursuing large generation, transmission, liquefied natural gas, pipeline, storage, grid modernization, and renewable programs while competing for engineering capacity, skilled labor, equipment, materials, financing, and regulatory approvals. These projects share tightly linked dependencies. A late permit, interconnection study, transformer, turbine, land right, or design decision can move the critical path and trigger contractor claims, escalation, financing costs, and lost revenue. Weak front-end definition can turn strategic urgency into premature commitments and repeated re-baselining.

Internal audit should focus on whether governance produces credible forecasts and early action, not only whether projects follow a checklist. The most useful reviews connect the business case, approved baseline, contract terms, field progress, risk register, contingency draw, and expected operating benefits. Portfolio-level review is also important when projects compete for the same people, outage windows, equipment, or financing and can no longer be evaluated as independent commitments.

Next steps for internal auditors

• Portfolio and stage gates. Confirm projects enter execution with defined scope, alternatives analysis, risk-adjusted economics, and accountable sponsors.
• Cost and schedule forecasts. Test quantity assumptions, contingency, actual costs, and estimate-to-complete discipline.
• Contractor and commercial controls. Review procurement, bid evaluation, progress validation, change orders, and conflicts of interest.
• Permits and supply dependencies. Trace land, environmental, interconnection, community, long-lead equipment, and financing milestones into an integrated schedule.
• Commissioning and benefits. Assess readiness, turnover documentation, in-service criteria, and post-implementation benefit tracking.

Regulatory policy and permitting uncertainty

Changes in statutes, agency rules, and permitting requirements can alter project economics and operating obligations after capital has been committed. Federal, state, local, tribal, and international requirements might move on different timelines or point in different directions. The risk is not limited to noncompliance. Management might make irreversible decisions using one policy outcome while approvals, customer recovery, or supply-chain eligibility remain uncertain.

Next steps for internal auditors

• Regulatory inventory. Confirm obligations, proposals, litigation, effective dates, owners, dependencies, and required evidence are tracked across jurisdictions.
• Scenario analysis. Test the effect of alternative policy, incentive, rate-recovery, and permitting outcomes on strategy, cash flow, and asset values.
• Permits and commitments. Review milestone tracking, permit conditions, community and tribal commitments, and escalation of threatened delays.

Geopolitical risk and energy security

The U.S. Energy Information Administration’s analysis of world oil transit chokepoints identifies the Strait of Hormuz and Strait of Malacca as the most important strategic routes by oil volume. Disruption at a major chokepoint can reduce the availability of crude oil and refined products, lengthen voyages, and increase freight costs. The effects can spread through benchmark prices, regional differentials, and refinery margins even when a company does not buy directly from the affected country.

Next steps for internal auditors

• Supply exposure mapping. Map crude oil and refined-product supply by source country, counterparty, transit route, and delivery point.
• Market and liquidity risk. Review position limits, hedge coverage, collateral needs, and counterparty exposure under oil-price stress.
• Inventory and alternatives. Validate minimum stock levels, alternate crude grades, backup routes, and terminal or refinery flexibility.