The way it was explained to me many years ago is that a bad hire can cause tremendous damage that goes above and beyond the harm of inadvertently missing out on a good hire. I've never really thought about whether that is true, but it is undoubtedly the reason why so many companies are risk-averse in hiring decisions.

It’s true if you’re a cutting edge company doing real R&D and parting with capital and agency to your workers as a result of it.

Every company whose CEO thinks he’s a mag7 but scoffs as paying more than >150k/yr to an engineer because that’s executive money that tries to ape that kind of risk management ends up with a hiring process that is optimized for rejecting people since their offered compensation will never meet the demand of people with the skill set they are looking for