what can happen if i don't update my MacBook air with the latest iOS version?

Agree with Both previous posting for all the same reasons mentioned.

Do I have a Rescue Plan In-Place. This comprises having 3 Backups using 2 methods and 1 Off Site incase of Theft, Loss or Natural Disasters. A Time Machine Backup is very useful and can be used to Revert to Previous Working macOS. For addition purposes - two Tested Bootable Clones each to separate external drives. This is insurance incase the upgrades goes sideways. At least one Tested Clone and / or Time Machine Backup should be Off - Site

At least with this in-place - there is a way back incase the update goes sideways.

There is some confusion here. A MacBookAir runs MacOs, not iOs.

If you don't update nothing drastic will happen, but at some point in the future your Mac might be left open to security issues.

Just to add, there may also be bug fixes and other improvements you would miss. It's always a good idea to stay current.