A probability that a change in regulations may occur causing your project failure. what is the best risk mitigation strategy to address this risk?

Risk Mitigation measure/actions/approaches vary and the best approach/action to take depends on the details and the specifics of the risk we are talking about.

However, before talking about risk mitigation, we need to WEIGH the risk that we are talking about which is CHANGE IN REGULATIONS that MAY impact the project and cause its failure

We need to qualify the above risk and assess it after we weihg it in terms of PROABBILITY X IMPACT

Apparently you are talking about HIGH impact (project failure) BUT what about the PROBABILITY FACTOR here ?  Is it High or Medium or Low ??  And on what basis you are determining this probability ??

What is this regulatory change that may threaten the project and cause its failure ?

And on what basis was this project approved and accepted in light of such a risk ?

Once we understand the above, we can specicaly see what can be done to mitigate this risk

1. Can we AVOID it ?
2. Can we TRANSFER it ??  or SHARE it with the government ?? or with insurance companies ?
3. cAN WE MINIMZE he impact ? ..... Or ...
4. Shall we just ACCEPT it as a probability and budget for it ?

I hope this is of help !!If you need to discuss specifics of your case, let me know !!