Throughout history, the impact of numerous natural disasters on the Australian economic structure has been witnessed. Examples include: cyclones Mahina (1899) and Tracy (1974); floods in New South Wales (1955) and South-east Queensland (1974; 2011; 2012); earthquake in Newcastle (1989); landslide in Thredbo (1997); and bushfires in Victoria, South Australia, Tasmania and Australia Capital Territory (Black Saturday 2009; Canberra Fires 2003; Ash Wednesday 1983; Black Tuesday 1967; and Black Friday 1939). Among all of these natural disasters, bushfires are more intrinsic to Australia re-shaping its ecosystems, landscapes and biological diversity. The resulting economic impact of these natural disasters is estimated to cost an average of AU$1.14 billion annually (BTE, 2001). This alarming statistic alone, along with the rapid economic growth in Australia, makes natural disasters a high priority issue for policy makers. In recent catastrophic natural disaster events, the emergency response of Australia has proven to be very effective at saving human lives, however the mitigation and preparedness phases of disaster risk reduction (DRR) appear to be less successful in avoiding the adverse economic impacts of natural disasters. One of the significant problems observed in this connection is the lack of effort to estimate the full economic impact of natural hazards, taking into account all the affected sections of the economy. This effort should consider not only the primary effects of the natural disasters, but also its secondary effects due to losses propagated through the economy due to inter-sectoral linkages. In order to achieve a paradigm shift from reactive response to a proactive risk reduction culture, disaster risk reduction measures need to be integrated into the economic development process. With this in mind, this paper discusses the shortcomings of the current approach and proposes a methodology for increasing the disaster risk resilience of the Australian economy.