After 5 different walks on 2 Caminos (CF & VdlP) I can give you my experiences: I have never felt threatened or been approached by ill-meaning people. However, here is what I do:
I have a small lightweight waist belt that I use when not walking. It contains my passport, phone, and a few other essential items (code-generator for my bank, retirement discount card (only for Norway), All these items are important, but not invaluable, so while walking, my waist belt is on top in my backpack. I shouøld mention that I very rarely, only when with friends I trust, enter into a bar/cafe and leaving my backpack outside, unattended: I prefer to walk outside with a beer in hand and then take off my backpack and shoes...
What is important, are my cards (Mastercard credit, Visa debit, health insurance, travel insurance, drivers license). Visa is in my card holder with the other cards, Mastercard credit card in another pocket as a backup : If I lose one, I have the other). All pockets locked with zip. Cards & cash never leave my body. You may also consider putting 100 Euros hidden somewhere in you backpack as another backup: I have never felt the need, but it may give an extra security.
At night, everything goes into my waist belt, which is placed in the bottom of my sleeping bag. Untouchable! In the shower, the belt is going with me. Same in the kitchen; everywhere: Never out of sight.
Cash: I use the ATMs to take approx. 1 week spending money with my Visa debit card. But I start looking for an ATM when I have +- 100 Euros left. That way, I can make it to Santiago by train wherever I am. I am quite confident that when I arrive in Santiago, I can contact Ivar and he will know how to help me fix things (as a consultant, not for free) Please say I'm right Ivar!?
Point is; As long as you have some cash, You can go to a destination where friends or an embassy can help you out. As long as you can phone home, they (your nearest) can contact insurance, health care, bank, or whatever, and start sorting out your problems.
But remember what the dying man said: "All the things I feared would happen in my life never did",