As we step into 2025, organisations worldwide are bracing for a rapidly shifting regulatory landscape.
According to 4CRisk.ai, with political shifts, evolving priorities at key regulatory agencies, and a widening gap between federal and state regulations, the need for proactive and strategic adaptation has never been more critical. From labour laws to cybersecurity standards, privacy regulations, and ESG commitments to financial crime enforcement, the upcoming year heralds significant changes.
This year marks a notable shift in regulatory frameworks with federal regulations becoming more lenient while state-level rules intensify. According to the KPMG US Ten Key Regulatory Challenges of 2025 report, this year will be pivotal as businesses navigate through these changes and emerging risks.
Amy Matsuo, Regulatory Insights Leader at KPMG LLP, highlighted, “2025 will be the Year of Regulatory Shift fuelled by a new Administration, agency leadership changes, and expanded regulatory divergence. Companies will look to ‘roll through the shift’ but must remain vigilant to potential new, emerging, and downstream risks—even amidst an agenda to reduce regulatory burden.”
As federal oversight diminishes, state governments are stepping in, creating a complex regulatory environment. States like California are leading efforts to uphold worker rights and environmental protections. California’s Attorney General, Rob Bonta, has expressed a strong stance against federal regulatory rollbacks, particularly in environmental protections. This indicates a growing need for organisations to closely monitor and adapt to the increasing number of state-specific regulations.
The complexity of varying regulations is driving the second significant trend: the adoption of Artificial Intelligence (AI). AI technologies offer secure, private, and domain-specific capabilities that enhance team agility and efficiency. They produce results up to 50 times faster than traditional methods, allowing for rapid adaptation based on informed decisions. AI accelerates several aspects of Regulatory, Risk, and Compliance program automation, including regulatory change management, compliance monitoring, controls rationalization, risk assessments, and report generation.
With the anticipated changes in AI governance, balancing innovation with security and privacy remains paramount. Businesses must stay ahead of both federal and state regulations, especially as state governments may push for their own AI laws. This dynamic requires companies to proactively manage AI-related risks and remain adaptable to both federal and state regulatory changes.
As disruptions from various sources become more frequent, organisations must demonstrate their financial and operational resilience. Whether it’s technological failures, economic volatility, or geopolitical tensions, companies need to be prepared to manage risks and recover swiftly from shocks. Regulatory scrutiny will push for robust business continuity plans and effective incident response strategies.
Businesses must stay informed about developments at both the federal and state levels and adopt flexible strategies to remain compliant. Investing in AI for regulatory, risk, and compliance teams, coupled with staff training, will be essential for adapting to 2025’s regulatory complexities. By using AI intelligently, organisations can ensure compliance and position themselves to thrive amidst regulatory uncertainties.
Copyright © 2025 RegTech Analyst
Copyright © 2018 RegTech Analyst
