The answer is a user-assigned managed identity for automation account recreation because this identity exists as a standalone Azure resource independent of the Automation account’s lifecycle. When the Automation account is deleted and recreated during deployment, the user-assigned managed identity persists and can simply be reassigned to the new account, allowing runbooks to continue authenticating without reissuing credentials or embedding secrets. On the AZ-104 exam, this scenario tests your understanding of managed identity types and their lifecycle dependencies—a common trap is choosing system-assigned managed identity, which is deleted along with the Automation account and forces credential re-creation. Remember the memory tip: “User-assigned is reusable; system-assigned is disposable.” This distinction is critical for maintaining seamless authentication in automated deployment pipelines.
AZ-104 Manage Azure Identities and Governance Practice Question
This AZ-104 practice question tests your understanding of manage azure identities and governance. 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.
An Azure Automation account runs PowerShell runbooks that must authenticate to Azure resources without embedded secrets. The automation account is recreated periodically during deployment, and the identity must continue to work after recreation without reissuing credentials. Which identity should you use?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
A user-assigned managed identity.
A user-assigned managed identity (B) is the correct choice because it is an independent Azure resource that persists even when the Automation account is recreated. Unlike a system-assigned managed identity, which is tied to the lifecycle of the Automation account and is deleted when the account is deleted, a user-assigned managed identity can be reassigned to the new Automation account after recreation without requiring new credentials. This allows the runbooks to authenticate seamlessly using the same identity, avoiding embedded secrets.
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.
✗
A system-assigned managed identity.
Why it's wrong here
This identity is tied to one resource instance and is removed when that resource is deleted.
✓
A user-assigned managed identity.
Why this is correct
This identity exists independently of the Automation account and survives recreation.
Related concept
Read the scenario before looking for a memorised answer.
✗
A service principal with a client secret stored in Key Vault.
Why it's wrong here
This still depends on a credential and introduces secret rotation and operational overhead.
✗
A shared access signature token.
Why it's wrong here
A SAS token is limited to certain data scenarios and is not a general reusable Azure identity.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often assume a system-assigned managed identity is simpler and sufficient, but they overlook that it is deleted with the resource, making it unsuitable for scenarios where the resource is recreated and identity continuity is required.
Trap categories for this question
Scenario analysis trap
A SAS token is limited to certain data scenarios and is not a general reusable Azure identity.
Detailed technical explanation
How to think about this question
User-assigned managed identities are backed by a service principal in Azure AD that is independent of the resource lifecycle. When you assign the identity to an Automation account, the Azure Instance Metadata Service (IMDS) endpoint provides the runbook with an access token via the managed identity OAuth 2.0 flow (RFC 6749). This token is obtained without any secrets, using the identity's client ID and the IMDS endpoint (http://169.254.169.254/metadata/identity/oauth2/token). In a real-world scenario, if you use a system-assigned identity and recreate the Automation account, any role assignments (e.g., Contributor on a resource group) become orphaned because the old identity's object ID is gone, requiring manual reassignment; a user-assigned identity retains its object ID and role assignments across recreations.
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 company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this AZ-104 question in full detail.
Manage Azure Identities and Governance — This question tests Manage Azure Identities and Governance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: A user-assigned managed identity. — A user-assigned managed identity (B) is the correct choice because it is an independent Azure resource that persists even when the Automation account is recreated. Unlike a system-assigned managed identity, which is tied to the lifecycle of the Automation account and is deleted when the account is deleted, a user-assigned managed identity can be reassigned to the new Automation account after recreation without requiring new credentials. This allows the runbooks to authenticate seamlessly using the same identity, avoiding embedded secrets.
What should I do if I get this AZ-104 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
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. An Azure Automation account is recreated periodically during a migration project. Runbooks must authenticate to Azure resources without embedded secrets, and the identity must continue to work after the account is rebuilt. Which two choices should you make? Select two.
hard
✓ A.Use a user-assigned managed identity so the identity is independent of the Automation account lifecycle.
✓ B.Grant the managed identity the required Azure RBAC roles on the target resources or resource groups.
C.Use a service principal with a client secret stored in an encrypted Automation variable.
D.Use a system-assigned managed identity attached to the Automation account because it is always reusable after recreation.
E.Store a storage account key in a runbook asset and retrieve it at runtime.
Why A: Option A is correct because a user-assigned managed identity exists as a standalone Azure resource independent of the Automation account's lifecycle. When the Automation account is recreated, you can reassign the same user-assigned managed identity to the new account, preserving the identity's object ID and its RBAC role assignments. This ensures that runbooks can authenticate without embedded secrets and continue to work seamlessly after the account is rebuilt.
Last reviewed: Jun 11, 2026
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