Be very alert as the student flies and always have a plan for how you will return the plane to a safe attitude or straight and level. After a few lessons, and if the student is doing well, I will usually let them do a little of "what ever you want" as long as it is at altitude and they tell me their plans first so I can critique that too.
I feel it is important to let them "play" a little and by telling me what they plan to attempt I can keep it safe and it doesn't scare the bejeeezus out of me as much either. It's amazing sometimes how little the result ends up looking like what they were trying to do.