Risk of Collision and the Stages of the Approach Situation
Rule 5 (lookout), Rule 6 (safe speed), and Rule 7 (assessing the risk of collision) are referred to as the "watchkeeping" rules and provide a risk detection and assessment method.
A valuable reference for the layman is Farwell's Rules of the Nautical Road, now in its ninth edition. This book lays out five stages in the approach to collision:
Stage 1: There is no risk of collision and you may manoeuvre your vessel as you will. (There are some exceptions: e.g., the narrow-channel rule (Rule 9) obliges a vessel to keep to the right in a narrow channel even when there is not an obvious risk of collision.)
Stage 2: Vessels have approached to the point where, if courses and speeds are maintained, there is a risk of collision. At this point the vessels should comply with the rules, in particular those in Part B - "Steering and Sailing Rules". Ideally two vessels in this stage will realize the situation at about the same time. But it is possible that a cautious crew will feel it is in Stage 2 when another crew, less cautious, feels it is still in Stage 1. The transition from Stage 1 to Stage 2 requires the application of good judgement and seamanship: being too cautious results in constraints on manoeuvring when there is no need for them, being too reckless pushes the situation needlessly to Stage 3. That said, the rules call for risk of collision to be detected early and the necessary action by the give-way vessel should be early, substantial, and easily detected by the other vessel.
Stage 3: At this point the stand-on vessel realizes that the give-way vessel is not taking timely and effective avoiding action. The stand-on vessel can (and must) take avoiding action, complying with Rule 2, "which may make departure from these Rules necessary to avoid immediate danger".
Stage 4: The vessels are now in extremis and action by both vessels is required to avoid a collision.
Stage 5: This stage is sometimes added to allow for actions to minimize injury and damage. A collision can no longer be avoided. The actions taken at this point are simply to minimize the consequences.
Note that if the COLREGS are followed by both vessels, the situation should never reach Stage 3 or Stage 4.