I'm not saying I'm going to hand my kid a horse and say good luck, nor that you should do so, but the downside of freedom is generally exactly what you say: that the potentiality for danger exists.
More free kids probably means more dead kids. Get a bad dice roll and the kid is dead and now you're in jail for some form of neglect induced manslaughter. Get a good dice roll and the kid gets life experiences, confidence, and more ability to navigate the world. Don't roll the dice at all -- maybe the kid locks up and can't rise to the challenge later in life when they meet challenges that threaten their life.
Life is a gamble. What I find ever more frustrating is the legislation and the child welfare organizations and courts increasingly take it out of the parents hands to determine what level of freedom and risk is appropriate for their children. I'm not sure there is any 'right' answer, but if there is a threshold I think we've long past moved beyond it towards the point of paranoia.