How are they taking on loads of risk? Risk has a particular meaning in investment and "well, a bug can blow up my company" isn't part of that meaning.
Simply creating risky (in the colloquial meaning) things is not itself a reason to deserve money.
Simply creating risky (in the colloquial meaning) things is not itself a reason to deserve money.
In this case KCG was doing the opposite of making markets --- they were taking --- they were eating the spread over and over and over again until they ran out of money.
This entire story is about a trading firm that lost 400m trying to provide market liquidity. Which part of the loads of risk isn't clear in this context?
Risk in finance definitely takes on more meaning than the narrow definition in modern portfolio theory (stddev of price).