The COVID-19 pandemic has had a profound impact on all aspects of daily life. From individual health and safety measures, to the changing nature of work, life today looks a lot different than what we were accustomed to. This is no more apparent than in the cities and communities we live and work in every day. The pandemic has caused tremendous uncertainty and triggered a need to rethink how we live and interact with our public spaces.
Our cities are the engine room of our economy, the communities where most of us live and the places where we connect with one another. With the world population increasingly residing in an urban setting, it is critical to truly understand the systemic risks facing cities as a result of the pandemic. This understanding will help ensure that our already constrained public resources are going where it matters most. However, with cities currently operating with limited resources, the strategies will need to be effective and efficient which means addressing the risks with the greatest potential impact and velocity. So, what are the biggest risks facing cities and how can we mitigate them?
Leaders will need to continue to refine their responses to reflect the tangible risks emerging in our cities as a result of COVID-19
How should leaders respond to risks emerging in our cities as a result of COVID-19?
Identifying these risks will be crucial for city leaders who wish to mitigate the impacts of the coronavirus pandemic
These key risks will be crucial for leaders who wish to mitigate the impacts of COVID-19
Understanding these risks are critical for city leaders as they mitigate impacts of COVID-19.
Knowing these risks will be critical to mitigating the impacts of COVID-19.
How can leaders develop effective strategies to address risks facing cities as a result of COVID-19?
Developing effective strategies to address risks facing cities as a result of COVID-19
Individuals and organisations alike have become remarkably adept at understanding and mitigating conventional risks. This is especially true for risks which we have had a historical experience with – events we have experienced, or challenges we have faced in the past. Immediate and isolated risks can generally be identified and managed with relative success. These risks however do not identify future challenges or disasters. To help recognise and prepare for these unforeseen and harmful events, we need to move away from a methodology which relies purely on historical data, to one which understands the interplay between risks and the overall risk network. With this in mind, KPMG’s Dynamic Risk Assessment was recently used to help cities better understand risks and how to mitigate them as municipalities, with a focus on rebuilding and resilience.
COVID-19 is having an unprecedented impact on cities – from the need to rethink the public realm, to altering the delivery of municipal services. As we have already seen, the potential impact of the pandemic on cities and their citizens is devastating. To avoid future devastation, cities will need to continue to move with agility and speed to implement proactive mitigation strategies.
To identify these risks, we first need to identify the breadth of risks our cities face using the science of expert elicitation and then apply network theory to the data collected so we can analyse the interconnectivity, velocity, severity and likelihood.
As a first step, it is paramount to identify any and all potential risks within the ecosystem. Through the Dynamic Risk Assessment, we identified the following risks on cities as a result of COVID-19.
Capacity and quality of infrastructure
The lack of surge capacity and deferred maintenance backlog in the current stock of infrastructure is further exacerbated by a lack of funding, leading to an inability to care for a growing/ageing population, limiting economic growth potential and quality of life.
The possibility that loss of lives, financial hardship and/or frustration with restrictions leads to civil unrest impacting ability to contain the virus and increasing costs.
Climate, sustainability and resilience
The investment dedicated to climate, sustainability and resilience is redirected to surviving the pandemic and its aftermath, resulting in least-current cost potentially damaging projects, leading to longer-term negative impacts on the planet, and global resilience.
Information obtained from citizens via apps and services to combat the pandemic is perceived to be insufficiently protected, inappropriately used, excessive, and lacking transparency resulting in a loss of trust and an unwillingness to provide future data.
Failure to provide sufficient financial support to workers and businesses, particularly small enterprises during restrictions leading to significant loss of savings, income, business failure, and negative impact on migration (i.e. bleeding to death without a transfusion).
Loss of revenue and increasing debt levels limit governments' abilities to invest, impacting what is considered a public service, the ability to provide services, support for social programmes and economic recovery.
Increased use of technology
The ability to access, develop and widely utilise technology (for individuals and organisations) to withstand and recover from the pandemic and its aftermath will impact the speed and success of economic recovery.
Individualism vs. the common good
The social contract between an individual and society is becoming increasingly individualistic and transactional in nature, as opposed to one where the good of society is placed first resulting in a diminishing respect for the law, government directives, and the common good. This risk is experienced at differing levels subject to the trust and respect for institutions, early judgements and stewardship of pandemic response.
Inequitable effects of the pandemic
The impact of the pandemic is felt disproportionally within lower-income individuals within a country and countries around the globe driving demand for action on inequality at both a local and global level.
Pandemic health response
The health response is inadequate due to insufficient healthcare resources (human or physical), delays in the availability of a vaccine or treatments, detection of infectious individuals, and/or incorrect decisions made on the lifting of restrictions resulting in the loss of lives and confidence.
Population and migration
Immigration restrictions and declining birth rates in developed countries lead to reduced economic efficiency and quality of life in developed and developing countries.
The value of real estate falls negatively impacting individuals, businesses and potential tax revenue but opens access to current non-participants in the real estate market.
Risk management and crisis planning
Lessons are not learned from this pandemic resulting in a failure to improve risk management, resilience and crisis planning leading to future loss of lives and economic impacts (those who ignore history are doomed to repeat it).
Global supply chains collapse resulting in an inability to provide basic supplies (e.g. food and PPE) to cities leading to empty shelves, wide price fluctuations, gouging, and resulting in an inefficient localisation of supply chains, protectionism, and hording.
Changes in the scope, nature or rates of taxes to cover the accumulated costs of the pandemic reducing disposal income and savings, impacting investment, productivity, economic growth, innovation, and social unity.
Trust, leadership and politics
People's loss of trust in leadership (viewed as incompetent/insincere/uninformed/out of touch) leads to political instability, change in political systems and fragmentation making widespread consistent decision making increasingly difficult impacting the economy and health.
Urban form and transport
People no longer view the current urban form as fit for purpose due to disease transmission risk reducing the effectiveness of public infrastructure, public transport, assembly spaces, and open spaces, compromising the ability to live-work-play in major cities.
Wider health concerns
A proportion of the population are increasingly isolated, and facing difficulty coping with both pre-existing and newly occurring mental and physical health conditions further exacerbated by the inability to physically access healthcare resources. Impacting health and economy.
The current pandemic is poised to cause a fundamental shift in public infrastructure, and delivery of municipal services. To help make sense of the uncertainty and plan for the future, we need to begin by addressing near and medium-term challenges. Based on the key takeaways and findings from our recent Dynamic Risk Assessment for cities we will be untangling the web of uncertainty and risk.
Want to do business with KPMG? Connect with us directly – or request for proposal.
Adopting a dynamic risk assessment approach to understand the velocity of risks and their influence on each other.
Adopting a dynamic risk assessment approach to understand the velocity of risks.
How can local government leaders seize the Smart City opportunity to meet the evolving needs of citizens and limited budgets?
How can local government leaders seize the Smart City opportunity?