Europe is witnessing a reshaping of the risk landscape as government policies change on a large scale, amid increasing geopolitical volatility. New research from the Chartered Institute of Internal Auditors (Chartered IIA) identifies the five regions most affected by these shifts, showing that close collaboration between risk managers and internal audit has become vital.
Global Policy Changes and Their Implications
The 10th annual Risk in Focus 2026 survey of 15 European countries shows that nearly two-thirds (64%) of internal audit heads consider changing laws and regulations to be the area most at risk as a result of global political shifts.
The results reveal a significant escalation in regulatory and operational pressures on organizations already struggling with market volatility.
The five risks most affected by global political shifts:
1. Changing laws and regulations (64%).
2. Cybersecurity and data protection (50%).
3. Market changes, competition and consumer behavior (46%).
4. Digitalization, new technology and artificial intelligence (46%).
5. Climate change, biodiversity, and environmental sustainability (43%).
Escalating trade and political tensions
The report comes at a sensitive time, with trade and political tensions escalating due to events such as Donald Trump's re-election and renewed US threats of new tariffs.
Changing internal and external policies create uncertainty, not only for exporters and importers, but also for organizations that rely on stable regulatory frameworks.
In the manufacturing and financial services sectors, for example, compliance teams are preparing to face a flood of disparate rules.
This means that multinationals may find themselves faced with a complex mix of conflicting requirements, higher operating costs, and increased risk of sanctions.
Anne Kim OBE, the institute's chief executive, warned that the cumulative effect of these pressures requires proactive risk oversight: "Our message is clear: "Global political changes - whether related to trade, regulation, or climate - have a direct and growing impact on the risks that companies face."
Cybersecurity: A geopolitical frontline
Cybersecurity and data protection came in second (50%).
This follows a series of high-profile attacks on British retailers, and a marked increase in activities backed by countries such as China, Iran and Russia.
The findings suggest that cyberspace has become a major battlefront, with actors linked to hostile states targeting corporate networks to disrupt operations, steal intellectual property, manipulate supply chains, and undermine consumer confidence.
The message for risk managers: The relationship between geopolitics and cyber risk is direct and inescapable.
Market volatility and shifting consumer behavior
Market changes, competition, and consumer behavior came in third (46%).
Research shows that political attitudes affect brand image, with some European consumers reluctant to buy American products associated with the new administration in Washington.
Tesla's declining sales are a prime example.
This illustrates the growing interplay between politics, reputation and revenue, where consumer perception can suddenly change, creating both risks and opportunities for businesses.
Technology and climate change: Growing risks
Fourth and fifth place went to:
Digitalization, new technology and artificial intelligence (46%).
Climate, biodiversity and environmental sustainability (43%).
technology:
Businesses have to balance between adopting AI tools quickly to gain competitive advantage, and complying with disparate ethical and regulatory rules. For example, the European Union's AI law will be much more stringent compared to other countries' regulations.
Climate:
Environmental risks are intertwined with new policies, such as carbon pricing, emissions regulations, and biodiversity protection.
Organizations are forced to adjust supply chains, rethink investment strategies, and strengthen disclosure practices, on pain of financial penalties and reputational damage.
An evolving role for internal audit and risk management
The report emphasized that the internal audit function must shift from retrospective verification to proactive, strategic assurance.
Says Kim: "In a volatile world, internal auditors are a vital source of assurance against the threats organizations face."
It also called for internal audit teams to be adequately resourced, and for their insights to be integrated with risk managers:
Proactive scanning of the organizational horizon.
Geopolitical risk assessment.
Planning with scenarios.
Objective: Linking top strategic priorities with rigorous operational checks, to ensure organizations are resilient under pressure.
Conclusion: The success of European organizations in this volatile climate increasingly depends on the deep integration of risk management and internal audit teams as a permanent component of the governance system.
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