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00:47 Dec 1, 2004
English to Chinese translations [PRO] Tech/Engineering - IT (Information Technology)
English term or phrase:two people that have the opposite exposure
There are two strategies for handling risk. One is diversification strategy, which is: We pool our risk, and everybody takes a little piece. The other idea is from options—hedging—in which we find two people that have the opposite exposure. There are these things called weather derivatives. For some people a lot of snow is a good thing, for others, it's bad. If you own a ski resort, lots of snow would be good. If you're a city and you have a snow removal budget, lots of snow would be bad. So people who have opposite exposures get together and they self-insure each other. If I'm a ski resort owner and it snows a lot, I'll make lots of money, so I'll give part of the money I make to the city and vice versa.