An investment's potential for loss at any given point in time is known as its risk.
Risk tolerance is how comfortable you are with the account value rising and falling with the markets. If you can't afford to lose money, even in the short term, you should consider less risky options, such as a stable value fund. If you're more concerned with growing your account value over time and keeping pace with inflation, you may want to invest in moderate to high risk options.
If you're not sure what your risk tolerance is, take this quiz.