Component breaks due to bug, deployment misconfiguration, scaling failure, etc., and your company loses $1M during the outage. If it's a vendor with an SLA, you can (sometimes) get them to cover the $1M. If it's in-house, you're eating it. It's often cheaper to build/run stuff yourself (unless it's so commodified that you're benefiting from amortization across the vendor's many clients), but then you have to be self-insured for problems.

in the event of an incident, the exec or departments reputational liability

e.g. if you direct the engineer you have hired to build something that turns out to infringe on someone else's BS patents.