It seems like companies do this because the stakes are so high to them. That is, if you hire this person and they fail, they will somehow do serious damage to the company. If you do this at a large enough scale, then you are putting the company in serious danger.

How do you de-risk this? My take would be to focus on getting "good enough" candidates in and then if they don't work out, be able to fire them easily. It's tough to normalize that. It's legal in states that have at-will employment but it seems that there are still taboos to doing that.