Michael's conduct toward Fredo - allowing him to live as long as Mama does, giving him access to the compound, etc. - shows clearly that Michael does not view Fredo as a threat.
Michael killed him out of rage and retribution, not as a calculated self-defense mechanism. This is affirmed in GFIII during the confession to Lamberto, when he explains his murder of Fredo by saying "He injured me."
"A man in my position cannot afford to be made to look ridiculous!"
