Plagues and other great diseases are important parts of history and some settings. They defy man and may even defy God in their swift and terrible punishment upon the body of society.
My issue with modifying/removing dwarves and elves is that the PC’s may want to play them.
One of the most powerful tools found in the World Building 102b article is the Worksheet. Here is a place to put the settings you might make with them.
A plague has hit the local area.
In humans it affects only the most vulnerable, the children and the very old, and even than it's little more than a summer cold. 24 hours of sniffles and then it's gone, barely noticeable really.
To sheep however it is fatal and the whole economy of the area is in serious trouble. If this keeps up the area could well be facing famine.
Somebody (enter the PCs) must find the rare herbs needed to make a cure.