Final answer:
For firms willing to operate in high-risk environments for potential high returns, adaptation serves as the best-suited means of political risk reduction.
Step-by-step explanation:
For firms that determine a high-risk environment is worth the potential returns, the method of political risk reduction that is best suited is adaptation. Adaptation involves making changes to firm strategy, structure, or operations to cope with or mitigate the risks in a certain environment. By adapting, companies may incorporate risk management into their operating procedures, develop good relationships with key stakeholders, or take out local insurance - effectively weaving risk management into the fabric of their everyday operations.
Firms may also consider other methods of political risk reduction such as hedging through financial instruments or diversifying investments, but adaptation directly addresses the operating environment by accepting the inherent risks while trying to manage or reduce the potential adverse impacts.