Some examples of using the risk level in practice:

Meg is climbing up the rigging and gets a Great (+2) degree of success. She climbs up with no problems, displaying speed and style in her climbing technique. This occurs regardless of her risk level (she succeeded, so risk doesn't come into play for her).

Atop the rigging, she draws her cutlass and fights it out with Claude for control of the crow's nest. She wins the first Opposed action, with Good (+1) degree. In other words, Claude lost with Mediocre (-1) degree, and so he looks at that degree and the risk level to decide what penalty occurs. If this is a Terrible (-3) risk situation, Claude might say that he receives a cut on his arm but their positions are essentially unchanged. On the other hand, if this is a Fair (0) risk situation, Claude might say that he is only be cut on the arm but that this then sends his weapon flying into the ocean: he still hasn't been removed from the nest since Meg only won with Good (+1) degree (and so didn't really succeed in her objective), but he's going to be in trouble in succeeding rounds (since he failed in a relatively risky situation).

On the other hand, if Meg had succeeded with Superb (+3) degree, then her action is much more successful: in a Terrible (-3) risk situation she gets her blade to Claude's throat and pins him against the wall, pretty much settling who's in charge here, while in a Fair (0) risk situation she sends Claude toppling from the nest to smash against the rigging and then the deck below (or a similar effect, since Claude is the one who dictates what specifically happens). In a Superb (+3) risk situation, Claude is skewered neatly through the eye, ending his career unless he's a PC or important NPC and somebody spends a FUDGE point for him to get a lucky break.

Deciding he's had enough, Claude dives into the water and starts swimming for shore (luckily, they're not that far away). He runs into a current and has to make a swimming check, getting a Mediocre result (-1) (which is a failure, since it was Fair difficulty). In a Terrible (-3) risk situation, given that he almost succeeded on his check, Claude just gets most of the way to shore and has to make another check. In a Fair (0) risk situation, he still gets most of the way to shore, but then his leg cramps up severely. Claude had better hope he's got a friend on shore. If he had instead got a Terrible (-3) result, he might have the same effects but much closer to the boat.