This photo shows several processes important to wall cloud (and potentially tornado) formation.  The wall cloud forms at the base of the thunderstorm's updraft.  The main area of precipitation is toward the right of the photo.  This rain-cooled air is ingested into the updraft via the wall cloud.  Since this air is cooler than the surrounding air, moisture condenses more quickly, and the wall cloud forms a "tail" which points toward the rain.  Observers can often see rapid upward motion in this portion of the wall cloud.  On the left is a second area of precipitation, which is forming the hook echo on the radar image.  The rotation within the storm is causing this precipitation to wrap around the storm's mesocyclone.  This is also where the storm's rear flank downdraft is located (possibly evidenced by the slight clearing to the left of the wall cloud).  Some of this air is also ingested into the storm's updraft via the wall cloud.  It is believed that the interaction of these two sources of inflow into the storm's updraft is important for tornado formation.  In this case, an observer would want to pay close attention to the base of the wall cloud where a funnel cloud could potentially develop.  He/she should also watch the little "fingers" of scud clouds hanging from the base of the wall cloud to see if they are rotating.