Final answer:
A subsidiary is a separate legal entity used by a parent company to finance and mitigate risks. It operates independently, allowing the parent company to protect itself from direct financial risk. Venture capitalists may also provide finance and help manage risk within a smaller company or start-up.
Step-by-step explanation:
The type of company ownership that finances and mitigates risks to the parent company is known as subsidiary. This is a separate legal entity created by the parent company (which may be a private company, public company, or any other business entity). The subsidiary can finance operations and projects, possibly by issuing bonds or stocks, without exposing the parent company to the full extent of the risks these activities entail. This separation can protect the parent company from financial risk if the subsidiary encounters legal or financial problems.
Venture capitalists are also relevant here. These investors provide financial capital and may directly manage or oversee the start-ups or small companies in which they invest, which can be seen as both financing and risk mitigation for the company they help to manage or guide.