- A
System-assigned managed identity
A system-assigned managed identity is automatically provisioned for the App Service and is tied to the resource's lifecycle. It can be granted access to Key Vault via RBAC or access policies, and the application code uses Azure SDK to obtain tokens without handling secrets.
- B
User-assigned managed identity
Why wrong: A user-assigned managed identity could also be used and offers flexibility, but the question states 'avoid using service principals or connection strings' and the simplest solution is the system-assigned managed identity. The scenario does not require a separate identity across resources, so system-assigned is the best answer.
- C
Azure AD application registration with a client secret
Why wrong: Using an application registration requires managing a client secret or certificate, which the security team wants to avoid.
- D
Azure AD service principal with certificate-based authentication
Why wrong: Service principals also require certificate management and are not as straightforward as managed identities for a single App Service scenario.
Quick Answer
The answer is the system-assigned managed identity. This is the correct choice because it creates an identity in Azure AD that is directly tied to the App Service instance, allowing it to authenticate to Key Vault using Azure AD tokens without storing any credentials or connection strings. Azure automatically manages the identity’s lifecycle, including rotation of its underlying credentials, which fully satisfies the security team’s requirement to avoid service principals or manual secret management. On the AZ-500 exam, this scenario tests your understanding of managed identity types and their role in securing resource access; a common trap is choosing a user-assigned identity, which works but requires separate creation and management, whereas the system-assigned version is simpler and automatically scoped to the specific App Service. Remember the mnemonic “System is Simple” — when a single resource needs direct, credential-free access to Key Vault, the system-assigned identity is the built-in, zero-configuration solution.
AZ-500 Manage identity and access Practice Question
This AZ-500 practice question tests your understanding of manage identity and access. 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.
A company develops a web application that runs on Azure App Service. The application needs to access Azure Key Vault to retrieve secrets. The security team wants to avoid using service principals or connection strings. Which identity should they assign to the App Service to authenticate to Key Vault?
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
System-assigned managed identity
A system-assigned managed identity is the correct choice because it provides an automatically managed identity in Azure AD, directly tied to the App Service resource, without requiring any credentials to be stored or rotated. This allows the App Service to authenticate to Key Vault using Azure AD tokens, eliminating the need for service principals or connection strings. The security team's requirement to avoid service principals or connection strings is fully met, as the identity is managed entirely by Azure.
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.
- ✓
System-assigned managed identity
Why this is correct
A system-assigned managed identity is automatically provisioned for the App Service and is tied to the resource's lifecycle. It can be granted access to Key Vault via RBAC or access policies, and the application code uses Azure SDK to obtain tokens without handling secrets.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
User-assigned managed identity
Why it's wrong here
A user-assigned managed identity could also be used and offers flexibility, but the question states 'avoid using service principals or connection strings' and the simplest solution is the system-assigned managed identity. The scenario does not require a separate identity across resources, so system-assigned is the best answer.
- ✗
Azure AD application registration with a client secret
Why it's wrong here
Using an application registration requires managing a client secret or certificate, which the security team wants to avoid.
- ✗
Azure AD service principal with certificate-based authentication
Why it's wrong here
Service principals also require certificate management and are not as straightforward as managed identities for a single App Service scenario.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse user-assigned managed identities (Option B) as the only managed identity option, overlooking that system-assigned managed identities are simpler and fully meet the requirement to avoid service principals or connection strings without additional resource management.
Trap categories for this question
Scenario analysis trap
A user-assigned managed identity could also be used and offers flexibility, but the question states 'avoid using service principals or connection strings' and the simplest solution is the system-assigned managed identity. The scenario does not require a separate identity across resources, so system-assigned is the best answer.
Detailed technical explanation
How to think about this question
Under the hood, a system-assigned managed identity works by provisioning a service principal in Azure AD automatically when the App Service is created, and Azure's Instance Metadata Service (IMDS) endpoint at 169.254.169.254 provides OAuth 2.0 tokens for accessing Key Vault. The token is obtained using the Azure Identity SDK (e.g., DefaultAzureCredential) without any hardcoded secrets, and Key Vault's access policies or RBAC roles are configured to grant the managed identity's object ID permissions. A subtle behavior is that if the App Service is deleted, the system-assigned managed identity is automatically cleaned up, preventing orphaned identities.
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
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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FAQ
Questions learners often ask
What does this AZ-500 question test?
Manage identity and access — This question tests Manage identity and access — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: System-assigned managed identity — A system-assigned managed identity is the correct choice because it provides an automatically managed identity in Azure AD, directly tied to the App Service resource, without requiring any credentials to be stored or rotated. This allows the App Service to authenticate to Key Vault using Azure AD tokens, eliminating the need for service principals or connection strings. The security team's requirement to avoid service principals or connection strings is fully met, as the identity is managed entirely by Azure.
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.
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Last reviewed: Jun 11, 2026
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