Hi @Holly276 I hope you are well.
Your cancellation policy is guest-facing, so doesn't have an effect on you as a host if you want to make a cancellation.
What happens to you depends on why you're cancelling- it's best to never cancel a confirmed reservation- it will effect your ranking and search position, and you'll have an automated review added to your profile stating you made a cancellation, which can put future guests off. As well as not being able to obtain superhost status and getting a financial penalty and having the cancelled dates blocked in your calendar so you can't re-book.
If there is an emergency situation, or similar you could ask Airbnb to cancel for you:
https://www.airbnb.co.uk/help/article/1320/what-if-i-need-to-cancel-because-of-an-emergency-or-unavo...
I would certainly think really carefully before taking any action and cancelling yourself.
Best wishes
Paul 🙂