Exploitation strategies of electric power and industrial equipment, stimulated mainly by economic and environmental trends, play a crucial role in ensuring uninterrupted power delivery and continuous operation. The diagnostics of industrial equipment is particularly important in this context, due to both operational multistresses and the strive for higher and higher voltage levels as well as due to increasing requirements with respect to safety, security and reliability in electric power and industrial networks. Modern diagnostics is a multidisciplinary domain. The development of power electronics, sensors, optoelectronics, communication, information technology and new materials has a strong influence on new approaches. This keynote will address the challenges and trends of modern diagnostics with a special focus on electric insulation systems exposed to power electronics stimuli. The main challenge nowadays is the proper interpretation of acquired diagnostic information and correlation with physical phenomena and degradation processes. Various complementary methods will be presented along with industrial examples; like the signal and image processing methods applied for assessing pulse diagnostic symptoms coming from stochastic signals of partial discharges in various structures of the insulation systems and high frequency response analysis applied to winding assessment. New challenges caused by electronic converters subjecting and stressing the electric insulation systems with high slew rate and repetition frequency of switching pulses is shown. The noninvasive and non-destructive character of applied methods make them especially attractive for diagnostics and monitoring purposes. Further, from the global perspective, reliability and safety drive the recent trends in industrial diagnostics.