The answer is that the disk encryption set's system-assigned identity lacks Get, WrapKey, and UnwrapKey permissions on the key vault. This occurs because when you deploy an Azure Disk Encryption Set via an ARM template, the system-assigned managed identity is created but does not automatically receive the required cryptographic permissions on the key vault’s access policy. Even if the key vault URI and key source are correctly configured, the identity must be explicitly granted these three permissions to retrieve the key and perform encryption operations. On the AZ-500 exam, this scenario tests your understanding of Azure role-based access control versus key vault access policies, and a common trap is assuming that a successful deployment of the encryption set means permissions are correctly assigned. Remember the mnemonic “G-U-W” (Get, Unwrap, Wrap) — if your disk creation fails with a permissions error, check that the encryption set’s identity has all three on the key vault.
AZ-500 Secure compute, storage, and databases Practice Question
This AZ-500 practice question tests your understanding of secure compute, storage, and databases. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. 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.
Refer to the exhibit. You are deploying an Azure Disk Encryption Set using this ARM template. The deployment succeeds, but when you try to create a disk using this encryption set, the disk creation fails with an error about key vault permissions. What is the most likely cause?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "most likely"
Why it matters: Probability qualifier — the question wants the most probable cause or outcome, not a guaranteed one. Eliminate low-probability options.
Why wrong: SystemAssigned is valid; user-assigned identity is also an option but not required.
B
The key vault URI is malformed
Why wrong: The URI format is correct.
C
The disk encryption set's system-assigned identity lacks Get, WrapKey, and UnwrapKey permissions on the key vault
The identity must be granted these permissions to access the key. The empty key version means it uses the latest key, but permissions are still required.
D
The key source should be Microsoft.Storage
Why wrong: Disk encryption sets use Key Vault as the key source.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The disk encryption set's system-assigned identity lacks Get, WrapKey, and UnwrapKey permissions on the key vault
Option D is correct because the key version is empty, which means the disk encryption set will use the latest version of the key. However, the system-assigned identity needs to have permission on the key vault. The error indicates that the key vault access policy is missing. Option A is wrong because the identity is correctly defined. Option B is wrong because the key vault URI is correct. Option C is wrong because the key source is correctly set to Key Vault.
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.
✗
The identity type should be UserAssigned
Why it's wrong here
SystemAssigned is valid; user-assigned identity is also an option but not required.
✗
The key vault URI is malformed
Why it's wrong here
The URI format is correct.
✓
The disk encryption set's system-assigned identity lacks Get, WrapKey, and UnwrapKey permissions on the key vault
Why this is correct
The identity must be granted these permissions to access the key. The empty key version means it uses the latest key, but permissions are still required.
Clue confirmation
The clue word "most likely" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
✗
The key source should be Microsoft.Storage
Why it's wrong here
Disk encryption sets use Key Vault as the key source.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
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.
Use explanations to understand the rule behind the answer.
TExam Day Tips
→Underline the problem statement mentally.
→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.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this AZ-500 question in full detail.
Identify which AZ-500 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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: The disk encryption set's system-assigned identity lacks Get, WrapKey, and UnwrapKey permissions on the key vault — Option D is correct because the key version is empty, which means the disk encryption set will use the latest version of the key. However, the system-assigned identity needs to have permission on the key vault. The error indicates that the key vault access policy is missing. Option A is wrong because the identity is correctly defined. Option B is wrong because the key vault URI is correct. Option C is wrong because the key source is correctly set to Key Vault.
What should I do if I get this AZ-500 question wrong?
Identify which AZ-500 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
Are there clue words in this question I should notice?
Yes — watch for: "most likely". Probability qualifier — the question wants the most probable cause or outcome, not a guaranteed one. Eliminate low-probability options.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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