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Study region South East Queensland (SEQ), Australia. Study focus Decision makers in the water sector need to deal with uncertainty about the impacts of climate variability and change. Identifying solutions for hydroclimatic risk adaptation strategies that are both optimal and robust in the presence of this uncertainty presents a difficult challenge. The instrumental hydroclimatic record in Australia is short (∼60−120 years depending on location and variable), and fails to encompass enough climate variability to allow the calculation of robust statistics around the baseline risk of extreme events (i.e. multi-year droughts, decadal periods with clustering of major flood events). This paper (i) demonstrates how palaeoclimate data can be used to better understand what is possible with respect to drought frequency and duration in South East Queensland (SEQ), Australia and (ii) investigates some implications from palaeoclimate data for drought planning, drought management and water security decision making. New hydrological insights for the region The instrumental period is not representative of the full range of past climate variability. Droughts worse than those in the instrumental record are not only possible, but likely, and the probability of conditions drier than the worst on instrumental record is not zero. This means that current drought risk estimates are at best misleading and probably convey a false sense of security that is not justified given the insights now available from palaeoclimate data.