Final answer:
Participative management is the adaptation mean that involves nationals in the subsidiary's management to mitigate political risk and align interests, which can also aid in protecting against capital flight and banking collapse.
Step-by-step explanation:
The adaptation to political risk that requires a firm to actively involve nationals in the management of its subsidiary is known as participative management.
This strategy is employed to align the interests of the local workforce with those of the company, thus reducing potential opposition and fostering good relationships with local communities.
In the context of encouraging foreign investment while protecting against risks, a developing country may adopt measures such as thorough regulatory frameworks, policies that encourage long-term investment over short-term portfolio flows, and structures like equity sharing or co-management.
These approaches provide locals with a stake in the success of the business and make sudden capital flight less likely while contributing to the transfer of skills and advancements in technology.