Since Rare is unlikely to do something time consuming, I'd suggest this simple fix that they might consider given it doesn't actually add anything to the game.
Simple fix: double the health of each tenticle, and at least tripple the rate at which they grab on to the ship.
I think this would be their prefered alteration as it shouldn't take much effort and time to change.
The thing is that the kraken (unlike the megalodon) has a low rate of hull breaches/minute. It's the only thing that truly would make it a true threat. Also, this would have a side effect of making it harder to simply escape the kraken (as most folks are doing rn).
Better fix: make the same modifications as the simple fix, but make the kraken violently rock the ship when grasping it. When someone is sucked into a tenticle, they are held up for no more than maybe 15-20 seconds before it plunges you into it's mouth (insta-death, no drowning). Then when the kraken is defeated, it barfs up shipwrecked loot along with high level merchant goods (such as exquisite spices).
This would not only encourage players to fight instead of run, but it would also make the battle more cinematic.
Unfortunately, not even this would satisfy everyone, so there is the ultimate fix which Rare is highly unlikely to do.
Best fix: do all the above changes, but give the kraken a body and some ability to chase a ship (since we've seen how fast the kraken is when it flees).
Though I'd love to see a kraken body, it would require Rare to completely rework the mechanics of how the tenticle work. This may be labor intensive for what it's worth, so I don't see it as something they'd consider.
But hey, that's why we're here. So they may find some inspiration from our comments, and know what we truly would like to see.