There should be a difficulty setting slider in the Gameplay section of the options.
With the Xbox version of D2:ED or DKS, from the main menu you can go into Settings and then the Gameplay section to adjust the Difficulty Level (there is a slider for low HP auto-pause, a checkbox option to display overhead damage values, then the difficulty slider and a checkbox to show the crosshairs).
For the PC version, if you found where the setting is but can not change it, then from the support FAQ
Problem
Cannot change difficulty because the slider is missing or invisible.
Solution
Quit the game and then remove this file:
Windows Vista and Windows 7: C:\Users\[WindowsUser]\AppData\Local\Divinity 2\Profile\settings.dv2
Windows XP: C:\Documents And Settings\[WindowsUser]\Local Settings\Application Data\Divinity 2\Profile\settings.dv2
If you cannot find the files, make hidden files visible. After deleting the file, restart the game.
To set Windows Explorer to show hidden files and folders, see the relevant link:
XP, Vista,
Win 7.