The Hungaroring is the only current venue that Mercedes have not won at since the turbo-hybrid era came into effect for the 2014 season, and Wolff says they face an uphill battle to end that streak on Sunday - particularly given how well the circuit suits Red Bull's strengths.
Daniel Ricciardo claimed his first Grand Prix triumph with Red Bull at the Hungaroring in 2014, while last year Ferrari and Red Bull filled the podium as Sebastian Vettel led home Daniil Kvyat and Ricciardo.
"This circuit has not been kind to us over the past two years and it plays to the strengths of our rivals," Wolff commented.
"The Red Bull, for example, is a car that functions well where high drag isn't penalised as much as at other types of circuit. So, in wet conditions and at low-speed circuits such as the Hungaroring, they are a major threat.
"We will need to be flawless to come out on top at this track."
Wolff said Mercedes also face a complicated balancing act in the championship, as they attempt to weigh their 2016 priorities against the need to switch focus to 2017 - a transition other teams have already made.
"We are also now entering a time where things are complicated even more by some big decisions to be made," Wolff said. "Every week we must analyse how much resource we move across to the 2017 project - but that's a tricky balance.
"Some teams will have stopped 2016 development very early - as early as February maybe, once the current cars hit the circuit. That does give them an advantage, as the learning curve is very steep at the beginning.
"If you are a few weeks behind you can find yourselves much further back in the end."
Mercedes go into the Hungary weekend with a commanding 131 point lead over Ferrari in the 2016 constructors' standings, while at the head of the drivers' table just a single point separates Silver Arrows pilots Nico Rosberg and Lewis Hamilton.