Oh, when we talk about audits of some companies I always remember Bernard Madoff's story: I'm sure that for years of his Ponzi scheme there were multiple audits of his company! It looked really safe. But now we know that it was never safe and if was fraud for tens of years!
Even if an exchange looks really safe remember that you risk your money, your own money trusting a third party when you can just keep money at a personal non custodial wallet. Everyone weighs their own risks, but IMO they should keep in mind that there is nothing safe for 100%.
Absolutely true, each person must bear responsibility for their money on their own. I spoke with several people to understand why it is so important for them to save coins on the exchange, the answers were amazing. Someone really believes that it is safe and in case of theft believes that the exchange will reimburse them for everything, and someone thinks that this is important, otherwise he will not have time to buy or sell coins at the best price if he keeps it in his wallet, very strange decisions.
They better verify if their assumptions are true that the exchange that they use will be responsible for their coins because I know that most of the exchanges don't work like that. The other reason that they said seems legit but again it will still depend on the exchange that they are using if they are insured or not.
It can also depend on the coins that they hold or want to buy. If it was a pump and dump kind of coin, then expect that its movements are fast but if it's a top crypto, then they shouldn't worry because they don't dump in an instant right after they pumped up, so even if they kept their coins in their external wallet they can always catch up.