Here's an interesting article that cleared some things up for me: Anatomy of a hack: How crackers ransack passwords like “qeadzcwrsfxv1331”

Based on the little reading I've done so far, it seems like the biggest risk is having the hashed passwords stolen from a compromised website which then allows the crackers to decrypt the passwords at their leisure.
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Victory awaits him who has everything in order — luck, people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck. Roald Amundsen