Step 1: Glucocorticoids like cortisol arise from progesterone through a series of adrenal cortex enzymatic modifications driven by P450 oxygenases.
Step 2: Each of these enzymes (17-alpha-hydroxylase, 21-hydroxylase, 11-beta-hydroxylase) inserts an oxygen atom as a hydroxyl group onto a specific carbon of the steroid nucleus. The cumulative addition of -OH groups defines the transformation.
Step 3: A reaction that introduces a hydroxyl group is by definition hydroxylation, making option b correct.
Step 4: No methyl group is added (ruling out methylation) and no carboxyl group is introduced (ruling out carboxylation), so the other choices fail.
\[\boxed{\text{Hydroxylation}}\]