First you must understand the anatomy of a fetus, as opposed to an adult. We breathe through our necks, and so the appearance of "strangulation" alarms us. Fetuses, however, do not breathe through their necks; they can't, because they live in liquid for 10 months. Instead, they receive their oxygen through the umbilical cord, and do not need to use their trachea to breathe until after they come out. For this reason, the most vulnerable part to a developing fetus is the umbilical cord itself, or the placenta to which it is attached, NOT the neck.
Babies can, and do, die because of accidents involving the cord and the placenta, such as cord prolapse, placental abruption, and other such incidents. The cord itself, however, is extremely strong, and unlikely to be compromised, except with a great amount of force. This article does a good job of explaining the mechanics of the umbilical cord.
Not only does the physiology of a nuchal cord make death by strangulation nearly impossible, but the incidence of nuchal cord is so common, that more babies ought to be dying if it were possible. Cord around the neck (nuchal cord) occurs in one out of every 4-5 births (various sources). That's 20-25% of all babies who are born with a cord around their neck at least once, and sometimes more. If nuchal cord is so deadly, why aren't more babies dying? The answer is that nuchal cord isn't deadly.
In this article from the March of Dimes, an organization which specializes in the prediction, prevention, and treatment of prematurity and defects, it is stated, "About 25 percent of babies are born with a nuchal cord (the umbilical cord wrapped around the baby's neck) (1). A nuchal cord, also called nuchal loops, rarely causes any problems. Babies with a nuchal cord are generally healthy."
Just to be on the safe side, many studies have been done that show that there are no increased risk of negative outcomes with nuchal cords. In these studies, they looked at ___ number of pregnancies, and tracked all the factors associated with those pregnancies and labors, and could find no statistical correlation between intrauterine fetal demise (IUFD) and nuchal cords. In other words, while some stillbirths had nuchal cords, it was apparently a coincidence.
While nuchal cords themselves aren't dangerous, I found this article that states, "Furthermore, decreased Wharton's jelly in certain areas of the cord, most notably the fetal and placental insertions, can result in occlusion of fetal blood flow if the vessels are twisted sufficiently" The article itself makes no conclusion about whether or not nuchal cords increase the risk of IUFD, but that statement would imply that the nuchal cord itself doesn't cause death, but may in some cases complicate things because it could also be twisted at the umbilicus or the placental insertion.
I have also heard it suggested that the cord could become tight enough to cut off the blood supply through the artery or vein in the neck. The carotid artery is fairly deep in the neck, so the pressure on the neck would have to be extraordinarily tight, something I believe would be nearly impossible for a fetus with a limited range of movement to accomplish.
If you are a mother who was told your baby would have, or did, died due to nuchal cord, you were misinformed. Do doctors lie? Sometimes. Sometimes they make an error in judgment, a baby dies, or a woman undergoes unnecessary surgery, and they need to have a reason in order to avoid being sued or fired. But I think this is not common.
I think in most cases, the doctor is not aware of the newest studies that show that nuchal cord is not a possible cause of death. I think in most cases, doctors want as badly as the parents to find a reason for why bad things happened to their babies. I think in most cases, a doctor is trying to do the best they know how, and they simply give their best guess to answer the often unanswerable questions.
In any case, it is clear from the evidence out there, and from our knowledge of anatomy and physiology, that having a cord around the neck is not life-threatening to the fetus, and should be treated with no more concern than a baby born posterior.