Why aren’t these firms insuring against this risk? Seems like any other risk that can be managed - pay premiums and so that a third party would fund any erroneous losses.
Clearing frequently act like a form of insurance for smaller firms, up to and including asking for killswitches in your trading engines and audits of your risk procedures.
But big firms clear themselves so don't have that. Theoretically the internal risk team is responsible for that but those teams are frequently undergunned.
One of the thing many of us in the industry at the time commented on, was how little was done to bail Knight out. Other than the 'oligarchy' argument that states that the old timers hated them (they did) the argument I subscribed to was, they weren't systematically important. Their entire function in the market could be taken over quickly by someone else with little disruption and largely they were the only ones that lost money on that day (not really but to an approximate).