the fact of their losses is the result of non-existent or obsolete security measures, that is the strong point of this project, limiting the risk of loss, currently anyone with access to a private key can empty the wallet completely, the same with multi-signatures always 2-3, 3-5 should be used. With this project, even if a subwallet has 10000BTC is hacked, your risk of losing will be the amount stipulated by you and not the total of the funds.
An exchange needs a hot wallet that can send enough to keep them running without human intervention.
No 2nd password or anything like that. Just Dave requested funds, here they are.
They should always keep most of their funds in a cold wallet that is multi-sig and / or hardware based to fill up the hot wallet.
Either one needs human intervention. You are just doing it a different way.
-Dave