As someone tangentially attached to the sports community, the olympics is already a bit screwed up anyway, simply because the sports seasons (and thus the qualification pathway) for many events in the games have been significantly disrupted by the coronavirus. Many athletes who were in touching distance of qualifying will not be able to, and other athletes will be sent in their stead (if it happens at all) Olympic qualification in most sports is extremely complicated, and this is having a serious effect.

That being said, sport is not so important (imho) that public safety should be put at risk, and cancelling the games (or postponing them) would seem a sensible option if things continue to get worse.