The rapid expansion of Internet of Things (IoT) technologies has introduced significant cybersecurity challenges, particularly at the network edge where IoT devices operate. Traditional security policies designed for static environments fall short of addressing the dynamic, heterogeneous, and resource-constrained nature of IoT ecosystems. Existing dynamic security policy models lack versatility and fail to fully integrate comprehensive risk assessments, regulatory compliance, and AI/ML (artificial intelligence/machine learning)-driven adaptability. We develop a novel adaptive edge security framework that dynamically generates and adjusts security policies for IoT edge devices. Our framework integrates a dynamic security policy generator, a conflict detection and resolution in policy generator, a bias-aware risk assessment system, a regulatory compliance analysis system, and an AI-driven adaptability integration system. This approach produces tailored security policies that adapt to changes in the threat landscape, regulatory requirements, and device statuses. Our study identifies critical security challenges in diverse IoT environments and demonstrates the effectiveness of our framework through simulations and real-world scenarios. We found that our framework significantly enhances the adaptability and resilience of IoT security policies. Our results demonstrate the potential of AI/ML integration in creating responsive and robust security measures for IoT ecosystems. The implications of our findings suggest that dynamic and adaptive security frameworks are essential for protecting IoT devices against evolving cyber threats, ensuring compliance with regulatory standards, and maintaining the integrity and availability of IoT services across various applications.