- A
Use Amazon S3 server-side encryption with customer-provided keys (SSE-C) and store the keys in AWS Secrets Manager with automatic rotation enabled.
Why wrong: SSE-C requires you to supply your own encryption keys with each request. AWS Secrets Manager can rotate secrets, but it does not directly manage S3 key material or provide integration with S3 for automatic key rotation. Additionally, SSE-C does not integrate with AWS CloudTrail for auditing key usage at the key level.
- B
Use Amazon S3 server-side encryption with AWS managed keys (SSE-S3) and enable automatic key rotation.
Why wrong: AWS managed keys (aws/s3) are owned and managed by AWS. You do not have full control over the key material, and automatic rotation is handled by AWS but is not configurable or auditable at the customer level.
- C
Use AWS CloudHSM to generate and store the encryption keys, and configure an AWS Lambda function to rotate the keys every year and log usage to Amazon CloudWatch Logs.
Why wrong: CloudHSM provides dedicated hardware security modules, but it does not provide built-in automatic key rotation. You would need to build custom rotation logic, and auditing key usage across many principals would require significant custom integration.
- D
Use AWS Key Management Service (AWS KMS) with a customer managed key and enable automatic key rotation.
AWS KMS customer managed keys give you full control over the key material and key policy. You can enable automatic annual rotation, and all key usage is logged in AWS CloudTrail, providing a detailed audit trail of which principal used the key.
CLF-C02 Security and Compliance Practice Question
This CLF-C02 practice question tests your understanding of security and compliance. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A financial services company stores confidential transaction records in Amazon S3. The company's compliance policy requires that all data at rest be encrypted using encryption keys that are under the company's full control. The keys must be automatically rotated every year. The company also needs a detailed audit trail of when each key was used and by which AWS principal. Which combination of AWS service and key type should the company use to meet these requirements?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Use AWS Key Management Service (AWS KMS) with a customer managed key and enable automatic key rotation.
Option D is correct because AWS KMS with a customer managed key allows the company to maintain full control over the encryption keys, enable automatic annual rotation, and provides detailed CloudTrail audit logs for every key usage, including the AWS principal that made the request. This satisfies the compliance requirements for encryption at rest, key rotation, and audit trail.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Use Amazon S3 server-side encryption with customer-provided keys (SSE-C) and store the keys in AWS Secrets Manager with automatic rotation enabled.
Why it's wrong here
SSE-C requires you to supply your own encryption keys with each request. AWS Secrets Manager can rotate secrets, but it does not directly manage S3 key material or provide integration with S3 for automatic key rotation. Additionally, SSE-C does not integrate with AWS CloudTrail for auditing key usage at the key level.
- ✗
Use Amazon S3 server-side encryption with AWS managed keys (SSE-S3) and enable automatic key rotation.
Why it's wrong here
AWS managed keys (aws/s3) are owned and managed by AWS. You do not have full control over the key material, and automatic rotation is handled by AWS but is not configurable or auditable at the customer level.
- ✗
Use AWS CloudHSM to generate and store the encryption keys, and configure an AWS Lambda function to rotate the keys every year and log usage to Amazon CloudWatch Logs.
Why it's wrong here
CloudHSM provides dedicated hardware security modules, but it does not provide built-in automatic key rotation. You would need to build custom rotation logic, and auditing key usage across many principals would require significant custom integration.
- ✓
Use AWS Key Management Service (AWS KMS) with a customer managed key and enable automatic key rotation.
Why this is correct
AWS KMS customer managed keys give you full control over the key material and key policy. You can enable automatic annual rotation, and all key usage is logged in AWS CloudTrail, providing a detailed audit trail of which principal used the key.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse SSE-C with customer managed keys in KMS, assuming that providing your own key (SSE-C) gives you full control and auditability, but SSE-C lacks automatic rotation and integrated auditing, which KMS provides.
Detailed technical explanation
How to think about this question
AWS KMS customer managed keys support automatic annual rotation by default, which creates new backing key material while retaining the old one for decryption of existing data. CloudTrail logs every KMS API call (e.g., Encrypt, Decrypt, GenerateDataKey) with the caller's IAM principal, enabling a complete audit trail. In contrast, SSE-C requires the client to manage key rotation manually and does not log key usage in CloudTrail, while SSE-S3 uses AWS-managed keys that cannot be audited per principal.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
TExam Day Tips
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A media company stores terabytes of video archives that are accessed once a year for audit purposes. Moving these objects to a cold storage tier (Azure Archive, S3 Glacier, or Google Nearline) costs a fraction of hot storage. Questions like this test whether you understand storage tiers, access frequency tradeoffs, and retrieval latency requirements.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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Security and Compliance — study guide chapter
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FAQ
Questions learners often ask
What does this CLF-C02 question test?
Security and Compliance — This question tests Security and Compliance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Use AWS Key Management Service (AWS KMS) with a customer managed key and enable automatic key rotation. — Option D is correct because AWS KMS with a customer managed key allows the company to maintain full control over the encryption keys, enable automatic annual rotation, and provides detailed CloudTrail audit logs for every key usage, including the AWS principal that made the request. This satisfies the compliance requirements for encryption at rest, key rotation, and audit trail.
What should I do if I get this CLF-C02 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
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Last reviewed: Jun 11, 2026
This CLF-C02 practice question is part of Courseiva's free Amazon Web Services certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CLF-C02 exam.
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