Advanced Robots Deployed in Factories

The push for automation extends beyond isolated tasks, with global investment in automation and AI expected to more than double by 2030. This acceleration is driven by persistent labor shortages, rising product complexity, and intense pressure for supply chain resilience. The strategic focus has shifted from simple cost reduction to enabling scalability, improving product quality, and supporting regional manufacturing strategies. This trend coincides with a significant push for reshoring, with 244,000 U.S. manufacturing jobs announced in 2024 through reshoring and foreign direct investment. Geopolitical tensions and tariffs are increasingly cited as key motivators for bringing production stateside. However, this domestic manufacturing expansion faces challenges, as only 6% of companies moving production from China are relocating to the U.S., with others choosing locations like Mexico and Vietnam. Regulatory pressures are also intensifying. The SEC's climate disclosure rule, effective for large filers in 2026, mandates reporting on climate-related risks and, when material, Scope 1 and Scope 2 emissions. While Scope 3 was excluded, state-level rules in places like California and EU regulations still require this supply chain data, compelling broader emissions tracking. On the operational front, OSHA is increasing scrutiny in 2025 and 2026 with a focus on high-risk sectors like manufacturing. Updates include stricter standards for machine guarding, enhanced requirements for injury and illness data submission, and a new mandate for properly fitting personal protective equipment (PPE). These changes emphasize a more proactive and preventive approach to workplace safety. The sourcing of critical materials remains a significant geopolitical risk, with the U.S. heavily reliant on foreign nations, particularly China, for processing minerals essential for technology and defense. The U.S. government is actively promoting the onshoring of these supply chains to reduce dependency on foreign suppliers for elements like rare earths, lithium, and cobalt. For internal audit functions, this confluence of automation, regulatory change, and geopolitical risk demands a shift in methodology. The focus is broadening from financial compliance to assessing risks in automated production environments and complex global supply chains. Audit teams are increasingly leveraging technology to provide real-time insights and predictive analytics, helping to proactively manage risks associated with tariffs, trade policy shifts, and supply chain vulnerabilities.