AWS IAM vulnerabilities can lead to security failures and breaches, particularly when it comes to identity and access management. Key vulnerabilities include not rotating access keys, reusing passwords, and not using multi-factor authentication (MFA). Additionally, allowing broad list actions on S3 buckets, all principals to assume a role, and full administrative privileges can also pose risks. To mitigate these vulnerabilities, it is essential to practice the security principle of least privilege, exercise good password hygiene, store credentials responsibly, monitor IAM configuration, and implement custom rules to enforce enterprise-specific needs.