The vulnerability can be exploited by inserting a payload into a parameter on the URL endpoint which allows for reading arbitrary files. This could be used to read sensitive files, access other users data, or aid in exploitation to gain further system access.
User input should never be used in constructing paths or files for interacting with the filesystem. This includes filenames supplied by user uploads or downloads.
If possible, consider hashing the filenames and reference the hashed filenames in a database or datastore instead of directly attempting to access filenames provided by users or other system components.
In the rare cases that the application must work with filenames, use the language provided functionality to extract only the filename part of the supplied value. Never attempt to use the path or directory information that comes from user input.