Quick Answer
The answer is AWS Key Management Service (KMS), the correct choice because it is the dedicated, fully managed service for creating and controlling AWS managed encryption keys used to encrypt data both at rest and in transit. KMS employs envelope encryption, where a customer master key (CMK) protects data keys that perform the actual encryption, and it integrates natively with services like S3, EBS, and RDS to enforce encryption policies seamlessly. On the AWS Certified Solutions Architect Professional SAP-C02 exam, this question tests your ability to distinguish between KMS and other encryption services like CloudHSM or ACM; a common trap is confusing KMS with CloudHSM, but remember that KMS provides managed keys with automatic rotation and IAM-based access control, whereas CloudHSM gives you dedicated hardware for regulatory compliance. Memory tip: KMS is the “key master” for AWS—if you need managed, integrated key creation and rotation for data at rest and in transit, think KMS first.
This SAP-C02 practice question tests your understanding of design for new solutions. 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 company is designing a new application that will process sensitive financial data. The application must encrypt data at rest and in transit. The company wants to use AWS managed keys for encryption. Which AWS service should the company use to create and manage the encryption keys?
AWS CloudHSM
Why wrong: CloudHSM provides dedicated hardware but requires more management than KMS.
AWS Secrets Manager
Why wrong: Secrets Manager stores secrets, but does not create or manage encryption keys.
AWS Key Management Service (KMS)
KMS is a fully managed service for creating and controlling encryption keys.
AWS Certificate Manager (ACM)
Why wrong: ACM manages SSL/TLS certificates, not encryption keys for data at rest.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
AWS Key Management Service (KMS)
AWS Key Management Service (KMS) is the correct choice because it is a managed service that enables you to create, store, and control encryption keys used to encrypt data at rest and in transit. KMS integrates with other AWS services (e.g., S3, EBS, RDS) and supports envelope encryption, where a customer master key (CMK) encrypts data keys that perform the actual encryption. It also provides automatic key rotation and fine-grained access control via IAM policies and key policies, meeting the requirement for AWS-managed keys.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
AWS CloudHSM
Why it's wrong here
CloudHSM provides dedicated hardware but requires more management than KMS.
AWS Secrets Manager
Why it's wrong here
Secrets Manager stores secrets, but does not create or manage encryption keys.
AWS Key Management Service (KMS)
Why this is correct
KMS is a fully managed service for creating and controlling encryption keys.
Related concept
Read the scenario before looking for a memorised answer.
AWS Certificate Manager (ACM)
Common exam traps
The trap here is that candidates often confuse AWS CloudHSM (which provides dedicated, customer-managed HSMs) with KMS (which provides fully managed, AWS-controlled keys), leading them to choose CloudHSM when the question explicitly requires 'AWS managed keys'.
Detailed technical explanation
KMS uses FIPS 140-2 validated HSMs to protect CMKs, and supports symmetric and asymmetric keys for encryption, signing, and verification. A subtle behavior is that KMS enforces a per-account, per-region key policy that can be combined with IAM policies, and when using envelope encryption, the data key is generated by KMS and can be cached by the AWS encryption SDK to reduce API calls. In a real-world scenario, if the application needs to encrypt sensitive financial data in S3, KMS integrates directly with S3 server-side encryption (SSE-KMS) to automatically encrypt objects at rest, while TLS handles encryption in transit.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
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
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Design for New Solutions — study guide chapter
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FAQ
Design for New Solutions — This question tests Design for New Solutions — Read the scenario before looking for a memorised answer..
The correct answer is: AWS Key Management Service (KMS) — AWS Key Management Service (KMS) is the correct choice because it is a managed service that enables you to create, store, and control encryption keys used to encrypt data at rest and in transit. KMS integrates with other AWS services (e.g., S3, EBS, RDS) and supports envelope encryption, where a customer master key (CMK) encrypts data keys that perform the actual encryption. It also provides automatic key rotation and fine-grained access control via IAM policies and key policies, meeting the requirement for AWS-managed keys.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Same concept, more angles
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Variation 1. A company is designing a new application that will process sensitive financial data. The data must be encrypted at rest and in transit. The application runs on EC2 instances. Which combination of services meets these requirements?
mediumWhy D: Option D is correct because EBS encryption provides at-rest encryption, and TLS provides in-transit encryption. Option A is wrong because S3 is not used for EC2 volumes. Option B is wrong because KMS alone does not encrypt data. Option C is wrong because ACM manages certificates, not encryption.
Last reviewed: Jun 24, 2026
This SAP-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 SAP-C02 exam.
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