To add and manage cancellation terms, click on the Tickets and products module -> Cancellation terms (at Global level). There you can create and manage cancellation terms for all of your events.
Click on the + button to add a cancellation term and then enter its name.
Once created you will be able to add as many terms as you want.
You can determine the cancellation cost the participant will incur in percentage (100% percentage of cancellation cost = complete refund), and when it will apply (ie. when they cancel within a specific number of days prior to the event.)