Explanation

Let's analyze each event:

1. A rogue trader within an institution - This is operational risk because it involves internal failures, human errors, or misconduct within the organization.

2. Stock XYZ decreases in price due to a market crisis - This is equity price risk (a subset of market risk) as it involves price movements in financial markets.

3. Using a put option to hedge an equity exposure - This creates basis risk because the hedge may not perfectly offset the underlying exposure due to differences in timing, pricing, or other factors.

4. Counterparty sues bank to avoid meeting its obligations - This is legal risk because it involves legal disputes, litigation, or contractual enforcement issues.

Therefore, the correct matching is:

• 1: operational risk
• 2: equity price risk
• 3: basis risk
• 4: legal risk

This corresponds to Option C.