The IISS warned that Obama's insistence on waiting for Pyongyang to kick start efforts to re-engage with the international community had so far yielded little.
"So far, strategic patience has not succeeded in bringing about change in North Korea," the London-based group concluded in its annual review of world affairs.
"Pyongyang is instead moving further away from the denuclearisation pledge and closer to projecting nuclear power over long ranges," it said.
Russia said today that it too believed North Korea was conducting work at the Yongbyon complex, and warned that the ageing facility was in such a "nightmarish state" it could cause a disaster.
"It is obvious that some works are being conducted, and for a long time at that. According to some signs, steps were indeed being taken to relaunch it," the Inter fax news agency quoted a diplomatic source as saying.
"Our main concern is linked to a very likely man-made disaster as a consequence. The reactor is in a nightmarish state, it is a design dating back to the 1950s," the source said.
"For the Korean peninsula this could entail terrible consequences, if not a man-made catastrophe.
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