When a monster attacks you, you have three chances to avoid getting hit entirely.
1) EVASION. You base chance to dodge is 50%. It is adjusted as follows:
-5% per level of the monster's attack
-5% per point of Strength the monster has
+5% / pt of Dex
+5% / pt of Gymnastics
+3% / pt of Defense
+2% / pt of Luck
However, note that the dreaded 10-cap is back and it applies to all of the defensive skills listed above. That is, up to 10 points in the skill, each point provides a single bonus. Up to 20 points, you need two points to provide a single bonus; above 20, you need three. (Not sure if it goes to needing four, above 30 points.)
2) RIPOSTE. If and only if you do not evade the attack, Riposte is checked. You have a 3% chance to riposte per point of Riposte skill, up to maximum of 50% -- note that the 10-cap applies to Riposte so this is achieved at 26 Riposte. If you Riposte, the full strength of the enemies attack automatically hits the enemy, instead.
3) PARRY. If and only if you do not evade or riposte the attack, Parry is checked. You have a 3% chance to parry per point of Parry skill, up to a maximum of 50% -- no 10-cap applies, so this is reached at 17 Parry. If you Parry, nobody takes any damage, just like a miss.
Note: In previous games Parry applied to missile attacks at 2% per point and non-AoE spells at 1% per point; not sure if that is still true. I assume (but don't know) that Riposte does not apply to missiles or spells at all.