Since circle C1 is tangent to the two sides meeting at corner W, its center O1 lies on the diagonal from W to Y. Circle C2's center O2 also lies on that same diagonal.
The full diagonal WY has length $4\sqrt{2}$ cm. Center O1 is at distance $r_1\sqrt{2}=\sqrt{2}$ cm from W along the diagonal. Center O2 is at distance $r_2\sqrt{2}$ cm from Y.
\[ O_1O_2 = 4\sqrt{2} - \sqrt{2} - r_2\sqrt{2} = \sqrt{2}(3-r_2) \]
Setting this equal to $r_1+r_2=1+r_2$ and solving gives $r_2 = 7-4\sqrt{2}$ cm.