Natural Disaster Early Warning Systems in Vietnam in the Digital Era: Challenges and Risk Management Implications for Commercial Banks

Abstract

Climate change has increased the frequency and severity of natural disasters, posing significant challenges to sustainable development, disaster resilience, and financial stability in Vietnam. In this context, digital-enabled early warning systems have become an essential component of disaster risk reduction by supporting timely decision-making, enhancing preparedness, and reducing potential socio-economic losses. This study examines the current state of natural disaster early warning systems in Vietnam, identifies key challenges to their effectiveness, and explores their implications for risk management in commercial banks. The study adopts an integrated qualitative approach combining literature review, comparative analysis, and policy-oriented assessment based on theoretical perspectives, international experience, and official reports. The findings indicate that although Vietnam has made considerable progress in hydro-meteorological forecasting and disaster monitoring, significant limitations remain in forecast model resolution, observation network coverage, data infrastructure, institutional coordination, and decision-support capacity. Furthermore, the adoption of digital technologies-including artificial intelligence (AI), big data, the Internet of Things (IoT), and Digital Twin-remains fragmented and insufficiently integrated across the early warning system. The study further demonstrates that weaknesses in disaster early warning systems have important implications for commercial banks by increasing credit risk, operational risk, and geographic concentration risk associated with climate-related disasters. To strengthen both disaster resilience and financial stability, the paper recommends enhancing multi-source data integration, expanding AI-driven decision-support systems, improving institutional coordination, and promoting a transition from reactive disaster response to proactive, risk-informed disaster management. These measures would contribute to more resilient early warning systems while strengthening the climate risk management capacity of Vietnam's commercial banking sector.