The correct option is C Red-tapism
'A process involving too much official formality' is option C, Red-tapism. Option A, 'Nepotism' is the act of using one's power or influence to get job or advantage for the members of their family. Option B 'Diplomacy' is the management of relationships between countries. Option D 'Bureaucracy' is a system of managing a country or company by a large number of officials. Thus, options A, B and D are incorrect and the correct word for the given phrase is Option C, Red-tapism.