AZ-305 Design data storage solutions Practice Question
A company needs to store sensitive customer data in Azure Blob Storage with encryption at rest using customer-managed keys (CMK) stored in a hardware security module (HSM). Which Azure service should they use to manage the keys?
⚠ Common exam trap
A common mix-up: candidates confuse the Azure Key Vault Premium tier (which supports HSM keys but in a shared multi-tenant HSM) with the dedicated HSM requirement, leading them to select Option A instead of the more appropriate Managed HSM.
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
✓
Azure Key Vault Managed HSM
Azure Key Vault Managed HSM is a fully managed, highly available, single-tenant HSM that is FIPS 140-2 Level 3 validated. It allows you to store customer-managed encryption keys (CMKs) in a hardware security module (HSM) for Azure Storage encryption at rest, meeting the requirement for HSM-backed key storage. The Premium tier of Azure Key Vault also supports HSM-backed keys, but the question specifies 'stored in a hardware security module (HSM)', and Managed HSM provides dedicated HSM partitions with stronger isolation and compliance.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Azure Key Vault (Premium tier)
Why it's wrong here
Azure Key Vault (Premium tier) is not the correct service name; while it does support HSM-backed keys, it is simply a pricing tier within the shared, multi-tenant Azure Key Vault service. Microsoft's current offering for a fully dedicated, single-tenant HSM is Azure Managed HSM, which provides isolated HSM partitions, FIPS 140-2 Level 3 validated hardware, and more granular administrative controls. Choosing 'Premium tier' misidentifies the service and overlooks the higher security boundary that Managed HSM provides for customer-managed keys.
- ✗
Azure Information Protection
Why it's wrong here
Azure Information Protection (now part of Microsoft Purview Information Protection) is a classification and labeling solution, not a key storage service. It tags and optionally encrypts documents and emails using Azure Rights Management (RMS), which relies on underlying key management, but it does not directly store customer data keys in an HSM. It is therefore incorrect for a requirement that asks where to store sensitive customer data encryption keys, as it lacks the dedicated key storage and lifecycle management capabilities of a key vault or HSM.
- ✗
Azure Key Vault (Standard tier)
Why it's wrong here
Azure Key Vault (Standard tier) is incorrect because it uses software-backed keys, not hardware security module (HSM) protected keys. Standard tier operates in a multi-tenant environment and lacks the FIPS 140-2 Level 3 validation and hardware-level tamper resistance that Managed HSM offers. For a scenario demanding HSM-backed customer-managed keys for sensitive customer data, Standard tier does not meet the higher assurance and compliance requirements.
- ✓
Azure Key Vault Managed HSM
Why this is correct
Azure Key Vault Managed HSM is the correct service for storing sensitive customer data encryption keys because it is a fully managed, single-tenant, FIPS 140-2 Level 3 validated hardware security module. It provides HSM-backed keys suitable for customer-managed keys (CMK) used in Azure encryption at rest, ensuring keys are protected in dedicated hardware partitions inaccessible to other tenants. Managed HSM also supports more granular access control, powerful Rbac for key management, and full key lifecycle management, making it the appropriate choice for high-security and compliance-driven environments.
Quick reference
Azure Blob Storage Tier Comparison
| Tier | Storage Cost | Retrieval Cost | Latency | Use Case |
|---|---|---|---|---|
| Hot | Highest | Lowest | Immediate | Active data, frequent reads |
| Cool | Lower | Higher | Immediate | Data accessed < once / month |
| Cold | Lower still | Higher | Immediate | Data accessed < once / quarter |
| Archive | Lowest | Highest + rehydration delay | Hours | Long-term compliance retention |
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This AZ-305 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-305 exam.