- A
Server-side encryption with service-managed keys
Why wrong: Service-managed keys are managed by Microsoft, not by the customer. The requirement specifies using a key stored in the customer's Key Vault.
- B
Server-side encryption with customer-managed keys (CMK)
SSE-CMK uses a key from Azure Key Vault that the customer controls. The storage account's system-assigned managed identity can authenticate to Key Vault to access the key.
- C
Client-side encryption
Why wrong: Client-side encryption encrypts data before sending it to Azure Storage, and keys are managed by the client application, not by the storage account's managed identity.
- D
Azure Disk Encryption
Why wrong: Azure Disk Encryption is used for virtual machine disks, not for Azure Blob Storage. It also uses Key Vault but is not appropriate for this scenario.
AZ-500 Secure compute, storage, and databases Practice Question
This AZ-500 practice question tests your understanding of secure compute, storage, and databases. This is a configuration task: choose the command set that satisfies every stated requirement. Small differences — like 'secret' vs 'password' or 'transport input ssh' vs 'all' — change whether the answer is correct. 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 stores highly sensitive data in Azure Blob Storage. The security policy requires that all data is encrypted at rest using a key that is stored in Azure Key Vault, and that the storage account uses its system-assigned managed identity to access the key. Which encryption configuration should they use?
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
Server-side encryption with customer-managed keys (CMK)
Server-side encryption with customer-managed keys (CMK) is required because the security policy mandates that the encryption key be stored in Azure Key Vault and that the storage account uses its system-assigned managed identity to access that key. CMK allows you to bring your own key (BYOK) into Key Vault and grants the storage account access via a managed identity, ensuring the key is under your control and not managed by Azure. Service-managed keys (option A) use Microsoft-managed keys, which do not satisfy the requirement for customer-controlled key storage.
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.
- ✗
Server-side encryption with service-managed keys
Why it's wrong here
Service-managed keys are managed by Microsoft, not by the customer. The requirement specifies using a key stored in the customer's Key Vault.
- ✓
Server-side encryption with customer-managed keys (CMK)
Why this is correct
SSE-CMK uses a key from Azure Key Vault that the customer controls. The storage account's system-assigned managed identity can authenticate to Key Vault to access the key.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Client-side encryption
Why it's wrong here
Client-side encryption encrypts data before sending it to Azure Storage, and keys are managed by the client application, not by the storage account's managed identity.
- ✗
Azure Disk Encryption
Why it's wrong here
Azure Disk Encryption is used for virtual machine disks, not for Azure Blob Storage. It also uses Key Vault but is not appropriate for this scenario.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates confuse 'encryption at rest' with 'client-side encryption' or 'Azure Disk Encryption', failing to recognize that the requirement for a managed identity to access a Key Vault key directly points to server-side CMK, not client-side or disk-level encryption.
Trap categories for this question
Scenario analysis trap
Azure Disk Encryption is used for virtual machine disks, not for Azure Blob Storage. It also uses Key Vault but is not appropriate for this scenario.
Detailed technical explanation
How to think about this question
When using CMK with Azure Blob Storage, the storage account's system-assigned managed identity is assigned the 'Key Vault Crypto Service Encryption User' role on the key vault, allowing it to wrap and unwrap the data encryption key (DEK) using the customer-managed key (KEK). The DEK itself is generated by Azure Storage and is encrypted with the KEK; this ensures that the storage service never has direct access to the KEK in plaintext. A real-world scenario where this matters is compliance with regulations like PCI DSS or HIPAA, which require cryptographic key material to be under the customer's exclusive control.
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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Secure compute, storage, and databases — study guide chapter
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FAQ
Questions learners often ask
What does this AZ-500 question test?
Secure compute, storage, and databases — This question tests Secure compute, storage, and databases — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Server-side encryption with customer-managed keys (CMK) — Server-side encryption with customer-managed keys (CMK) is required because the security policy mandates that the encryption key be stored in Azure Key Vault and that the storage account uses its system-assigned managed identity to access that key. CMK allows you to bring your own key (BYOK) into Key Vault and grants the storage account access via a managed identity, ensuring the key is under your control and not managed by Azure. Service-managed keys (option A) use Microsoft-managed keys, which do not satisfy the requirement for customer-controlled key storage.
What should I do if I get this AZ-500 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 AZ-500 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-500 exam.
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