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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 a few months ago. The pandemic has caused tremendous uncertainty and triggered a need to rethink how we live and interact with public spaces.

The impact of COVID-19 on cities

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 against them?

Taking a dynamic approach to identifying risks

Individuals and organizations 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 experiences, 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 recognize 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 (DRA) was recently used to help cities better understand risks and how to mitigate them as municipalities with a focus on rebuilding and resilience in the new reality of a post-COVID-19 world.

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 act fast to implement mitigation strategies. 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.

To identify these risks, we first need to identify all the risks we face including future risks using the science of expert elicitation and then apply network theory to the data collected so we can analyse the interconnectivity, velocity and severity and likelihood.

With this in mind, there are a series of key questions to be answered:

We can answer each of the above questions based on the findings from the DRA. Together, the findings will reveal not only the risks with the greatest impact, but insights into strategies for mitigating the negative impacts of the pandemic.

What are the biggest risks facing cities?

As a first step, it is paramount to identify any and all potential risks within the ecosystem. Through the DRA, we identified the following risks on cities as a result of COVID-19.

Number Item Description
1 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.
2 Civil unrest 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
3 Climate, sustainability and resilience (CSR) The investment dedicated to CSR is redirected to surviving the pandemic and its aftermath, resulting in least-current cost potentially CSR-damaging projects, leading to longer-term negative impacts on the planet, and global resilience.
4 Data privacy 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.
5 Economic crisis 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 mass migration (i.e. bleeding to death without a transfusion).
6 Funding availability 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.
7 Increased use of technology - Digital Divide The ability to access, develop and widely utilise technology (for individuals and organizations) to withstand and recover from the pandemic and its aftermath will impact the speed and success of economic recovery
8 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
9 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
10 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.
11 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.
12 Real estate 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.
13 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).
14 Supply chains 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 localization of supply chains, protectionism, and hording.
15 Tax 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.
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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
17 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.
18 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. To learn more, explore the sections below. Stay tuned for our next post in the series – the most severe and likely risks.