Whether a trade is called repo or reverse repo depends entirely on which side you are. The cash borrower does a repo; the cash lender does a reverse repo, and both descriptions refer to the same transaction.
Money market funds and other cash-rich institutions use reverse repo to earn a secured return on short-term cash without taking credit risk on an unsecured borrower. Central banks use a standing reverse repo facility to set a floor under short-term rates by absorbing cash at a published rate.
The lender's risk is that the counterparty fails while the collateral has fallen in value, which is what the haircut is sized to cover. Collateral quality, mark frequency and the term of the agreement are the three variables that matter.
Related: repurchase-agreement, haircut, collateral, money-market-fund, federal-funds-rate, counterparty-risk