Maxis has already detailed the unspeakable fates that can befall citizens of your SimCity, but those disasters are setbacks. You won't actually lose the game, and in fact the developer has intentionally made it impossible to lose the game. According to lead designer Stone Librande, the closest you can come to a failure state is being flat broke and buried in loans.
"In the worst case, if you run completely out of money, you can turn off all of your government buildings," Librande explained to PC Gamer. "Even if you have one zone with one house, you would start making money again and get back in the black. That's the basic idea. You'll never lose. If you get down to zero dollars, it might be very painful to recover, but it's never game over."
But then, he notes, the team realized one potential problem, very much like real life problems: debt. "When we started working on the loan system, we realized that there's one thing that could happen where you could have so much debt in loans that even turning off all your government couldn't let you recover from that debt. Then it would really be like, 'I can't play this city anymore.'" But, he says, the game still doesn't actually force you to stop playing or present a "Game Over" screen. Another city in your region, either one of your own or a friend's, could donate you the cash to bring your city back in working order. As long as you can beg, you can keep going.
Inversely, Librande noted that the game doesn't really produce a win condition either. "For a lot of players, harmony is not a desirable goal," he said. "But the basic loop of the game, from the beginning stages up through the high-density buildings, is that when your city gets really happy, it grows. It grows in density. Every time that density growth happens, it puts pressure on your city. In a way, happiness causes growth, which causes pressure, which causes collapse. Then you work to get back to happiness, and once you’re happy, it's time to grow again."