Australia’s banks show how to prepare for cable blackouts

The writer is the author of ‘The Undersea War: The International Battle for Supremacy at the Bottom of the World’. She is a senior fellow at the Atlantic Council and advises M&C Saatchi World Services

Australia is connected to the rest of the world by a rather small number of subsea data cables. Those cables efficiently transmit all the connectivity the country needs; they even offer spare capacity. But if the cables were damaged, Australia would struggle. Now the country is creating a backup that would thwart the worst harm — and other countries should learn from the Australians’ pragmatic take.

Earlier this year, executives from National Australia Bank sat down with managers from other leading financial institutions and government officials. The purpose of the gathering was to simulate what would happen if the country’s subsea cables suddenly became unavailable. “In the first stage, we hypothesised that the cables on the east coast, where most of our cables run, were cut,” Brad Carr, NAB’s executive in charge of geopolitical risk, who conceived the simulation exercise, told me. “And then we assumed the cables on the west coast were cut too.” The teams switched to satellite communications, only to discover that this transmitted a minuscule portion of the data — that is, money — they needed to send.

On their own, satellites won’t save banks or anyone else if cables suffer a massive outage. The Australians realised that they needed to plan for a situation in which their country found itself cut off from the rest of the modern world. Repair ships and their crews excel at their task, but they need time to get to the fault site, and malicious actors could obstruct them. Then there are administrative delays. Repairs to cables that travel through Indonesian waters — including the crucial links that connect Australia and Singapore — require Indonesian permits, which can take over a month to obtain.

For all these reasons, Australia needed a backup plan, the exercise demonstrated. Its major banks had already, together with the government, begun developing a plan that would allow the financial system to work in a mostly offline situation. “If we have a major incident, how can we make sure that our customers can pay for groceries?” Carr explained.

In parallel, the government has launched CI Fortify, guidance for infrastructure operators “in preparation for instances of crisis or service disruption”; it also expects operators to be able to isolate their infrastructure from other networks and systems for up to three months to be able to provide critical services to Australians.

If the cables were cut, the country would have to become digitally self-sufficient, relying on its domestic connectivity. In a crisis Australian consumers would be able to use their debit cards and withdraw cash from ATMs, and banks would be able to make necessary transactions, though without access to international bank-clearing systems. “It’s like field surgery, not a complete hospital,” a person familiar with the efforts told me. “There will be blood, but it will save the patient.”

Finland is making similar advances. And this summer, Sweden’s central bank teamed up with retail banks and payment cards “to enable card payments to be made even in the event of disruptions in data communication lasting up to seven days”.

Australian leaders are acutely aware of China’s fast-growing submarine fleet and the mysterious visits paid by Chinese research vessels to nearby waters. It could be nothing — but if it’s not, Australia will weather the storm a whole lot better than the countries that treat the risk of a major cable incident as unlikely. In August, Vietnam — which was less prepared — faced a major subsea-cable crisis when four of its eight major cables were damaged and connectivity dropped by 30 per cent.

Much of modern life would come to a halt without undersea cables. Planning for the turmoil that would hit the financial system if they were cut creates resilience at little expense.