Abstract: Under the background of three-echelon supply chain,in which the manufacturer is risk-neutral,the distributor and the retailer are downside-risk,the impact of risk aversion is studied.It is found that the supply chain isaot coordinated under the downside-risk measurement.By using of the method of supply chain coordination,a risk-sharing contract composed of return policy,revenue sharing contract,and buyback contract is designed.The contract can not only offer the desired downside-risk protection to the distributor and the retailer,but also provide more profits to the agents and accomplish channel coordination.Finally,through a numerical example,the effectiveness and feasibility of the risk-sharing contract is verified.

Key words: downside risk, three echelon supply chain, risk control, risk-sharing contract