Process Gap Analysis and ESG Risk Prioritization Using the Best-Worst Method: Development of an APQC-Based Internal Audit Readiness Model in the Power Generation Utility Sectorness Model in the Power Generation Utility Sector

Abstract

The rapid demand for Environmental, Social, and Governance (ESG) reporting in the energy sector is putting increasing pressure on power generation companies to strengthen governance, improve the reliability of non-financial data, and ensure readiness for sustainability assurance. However, the complexity of operational processes and fragmentation of internal controls mean that ESG risks cannot be effectively identified through traditional audit approaches. This study developed the APQC–BWM Integrated Process-Based ESG Audit Priority Model, which combines the APQC Process Classification Framework, performance risk analysis (EBITDA and EAF), and the Best–Worst Method (BWM) to determine objective and measurable audit priorities. Two critical processes, Operate Power Generation and Manage Costs and Investments, were identified based on their contribution to strategic KPIs and their exposure to ESG risks. A panel of experts conducted a comparative assessment using BWM to generate strategic weights for each risk criterion. The results show that governance risks, particularly weaknesses in internal control design, are the dominant factors affecting EBITDA, while process and technology complexity are the main drivers of operational risks impact EAF. Integrating strategic weights with actual performance scores produces an Audit Priority Index (API) to more material risk-based audits. This study offers a novel application of BWM in mapping ESG risks at the process level, as well as an audit readiness model that combines APQC and ESG principles. Practically, this model provides a replicable tool to help internal auditors focus resources on high-risk areas and improve the reliability of ESG reporting in the power generation utility sector.