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Yes there is about 5% risk of ovarian cancer.
CA 125 level also should be checked as tumor marker.
The cyst can be completely removable by laparoscopy--no bigger incision needed. Best wishes,It was my pleasure to help you today.If I have answered all your questions, Please rate my response Excellent (click on the 5th star on top).Please bookmark my profile for fast, reliable authentic answers!This is the link to my profile:http://www.justanswer.com/medical/expert-mysticdoc/
Yes that does increase the risk of cancer a bit.
Yes they can find out for sure after removing the cyst through biopsy.