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Quick Answer
The correct approach is to create a custom Azure Policy definition, assign it at the management group containing the production subscription, and configure Azure Blueprints to include that policy assignment for repeatable deployment. This works because Azure Policy enforces rules like encryption at rest and denying public network access at the resource level, while assigning at the management group ensures inheritance across all child subscriptions. Azure Blueprints then packages the policy with other artifacts into a versioned, auditable template, guaranteeing consistent governance across deployments. On the AZ-104 exam, this tests your understanding of the layered relationship between Policy (for granular rules) and Blueprints (for orchestrated compliance packages). A common trap is choosing only Policy assignments without Blueprints, missing the need for repeatable, versioned enforcement. Remember the mnemonic: Policy enforces the rules, Blueprints bundles the blueprint.
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.
You are designing a governance strategy for an Azure environment that includes multiple subscriptions. You need to ensure that all resources deployed in the production subscription adhere to specific regulatory compliance requirements, such as encryption at rest and denying public network access. Which three of the following should you implement? (Choose three.)
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
✓
Create a custom Azure Policy definition that enforces encryption at rest and denies public network access.
Creating a custom Azure Policy definition allows you to enforce specific regulatory requirements like encryption at rest and denying public network access. Assigning this custom policy at the management group that contains the production subscription ensures the policy is inherited by the subscription and all its resources. Configuring Azure Blueprints to include the custom policy assignment and assigning the blueprint to the production subscription provides a repeatable, versioned deployment of the policy along with other artifacts, ensuring consistent governance.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is confusing Azure Policy (which enforces resource configuration rules) with Azure RBAC (which controls user permissions), leading candidates to incorrectly select RBAC as a method to enforce encryption and network restrictions.
Detailed technical explanation
How to think about this question
Azure Policy uses a JSON-based policy definition with 'if-then' logic, where the 'if' condition evaluates resource properties (e.g., encryption settings, network access rules) and the 'then' effect can be 'Deny', 'Audit', or 'Append' to enforce compliance. When assigned at a management group, the policy is inherited by all child subscriptions, but explicit exclusions can be applied using 'exemptions' or 'exclusions' scopes. Azure Blueprints packages policy assignments, role assignments, and resource templates into a single, versioned artifact that can be assigned to a subscription, ensuring consistent deployment across environments.
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.
What to study next
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FAQ
Questions learners often ask
What does this AZ-104 question test?
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: Create a custom Azure Policy definition that enforces encryption at rest and denies public network access. — Creating a custom Azure Policy definition allows you to enforce specific regulatory requirements like encryption at rest and denying public network access. Assigning this custom policy at the management group that contains the production subscription ensures the policy is inherited by the subscription and all its resources. Configuring Azure Blueprints to include the custom policy assignment and assigning the blueprint to the production subscription provides a repeatable, versioned deployment of the policy along with other artifacts, ensuring consistent governance.
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.
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Last reviewed: Jun 11, 2026
This AZ-104 practice question is part of Courseiva's free Microsoft 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 AZ-104 exam.
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