Two-time Webb Ellis Trophy winners Australia have earned plenty of praise for an impressive Pool A campaign in which they won all four of their matches, including notable victories over England and Wales.
Conversely Scotland battled their way into the last eight through a wide-open Pool B, and head coach Cotter is well aware that his team start as underdogs to make the semi-finals.
"They haven't lost a game yet, so they are the form team and the favourites not only to beat us but to go on and win the World Cup," Cotter said.
"They are a team that is more dangerous at the end, so we can't even allow a slight slip in concentration.
"You have to stop them stringing together phases of play and building momentum. They have strong individuals across the park. They are quick to the breakdown and very aggressive at the breakdown.
"We were very happy to make the quarter-finals, but we quickly moved the focus to this game which is a knockout match. The boys know they have to be on top of their game.
"They know they need to improve their defence from the last game and need to move the ball when they have the chance."
Scotland's XV does not include hooker Ross Ford and lock Jonny Gray after both were banned for three weeks for dangerous tackles during Scotland's dramatic 36-33 pool win over Samoa last time out.
Both bans have been appealed, but Cotter says the squad is always ready for such eventualities.
"We are used to those things and we have to adapt and move on," he added.
"These are things that we anticipate, though we don't like them. These are situations we are used to and prepare for."