Policy Rollbacks Leave Businesses Vulnerable to Escalating Climate and Nature Risks

Companies across Europe are being warned that they must strengthen their ability to navigate an increasingly volatile landscape of environmental risks, from dwindling natural resources and damaged ecosystems to severe weather events that can cripple operations. The message comes from hundreds of corporate audit specialists sounding the alarm over the private sector’s readiness.

In a sweeping survey by the Chartered Institute of Internal Auditors, 900 senior risk professionals were asked to weigh in on the challenges awaiting businesses in the wake of recent political shifts. The findings reveal a corporate world already stretched thin: almost two-thirds (64%) said their organisations are struggling to keep pace with the wave of new or amended regulations, a predictable outcome given that 2024 saw elections in jurisdictions representing half of humanity.

Yet behind the compliance scramble lies a more profound unease. While cyberattacks have dominated headlines, many auditors see climate- and nature-related risks as far more insidious over the coming years. 43% believe these environmental threats could be significantly intensified by the geopolitical and economic uncertainty now shaping global policy.

“The message from our research is clear: global policy changes, whether related to trade, regulation, or climate change, are having a direct and growing impact on the risks businesses must manage,” said Chartered Institute of Internal Auditors CEO Anne Keim.

Their concerns are far from abstract. The report highlights tariffs that are inflating the cost of clean energy components, households postponing purchases of low-carbon technology amid cost-of-living pressures, the EU scaling back its due diligence rules, and the US reducing funds for environmental monitoring. Adding to the turbulence, several G20 nations are funnelling resources away from sustainable development and international aid towards military spending and artificial intelligence.

Trade tensions are also biting. European consumers have been shunning US brands, layoffs are mounting across multiple sectors, and shifting consumer habits, compounded by rapid AI disruption, are forcing companies to rethink supply chains. A full breakdown of the Chartered Institute’s findings is slated for release in September.

Keim added: “In an increasingly volatile world, internal auditors serve as a vital source of assurance against the multitude of threats organisations face. We urge business leaders to work closely with their internal audit teams to gain assurance that internal control and risk management frameworks are agile, responsive, and robust in this fast-changing environment. It is also essential that boards ensure internal audit functions are properly resourced to carry out their roles effectively.”

Rethinking Risk in a Polycrisis Era

This call to action comes as the global risk management community faces an uncomfortable truth: fewer than one in ten experts expect the next decade to be marked by relative stability. Instead, the consensus is clear — extreme weather, biodiversity collapse, irreversible climate shifts, and resource shortages top the list of likely, high-impact threats.

A new paper from the Accelerator for Systemic Risk Assessment (ASRA) argues that the traditional playbook for risk management is outdated and dangerous. The authors argue that existing models overlook the way individual crises can trigger cascading effects. A single weather disaster may damage buildings and infrastructure immediately, but the ripple effects, including falling property values, job losses, and degraded ecosystems, can last for years.

Published in Nature Communications, the research outlines critical blind spots in current frameworks and calls for a systemic, integrated approach to analysing and responding to complex risks. ASRA plans to release an open-source tool in October to help businesses, governments, and researchers more effectively explore these interlinked threats.

“We urgently need new tools to understand how risks in one system can trigger cascading failures across others,” said lead author Dr. Ajay Gambhir, ASRA’s director of systemic risk assessment.

“From farm to fork and from fuel to final energy use, food and energy are a textbook example of entangled systems: they are critical to our lives, but they’re far more fragile and interconnected than people realise.”