AZ-900 Describe Azure architecture and services Practice Question
A company wants to store sensitive encryption keys in a hardware security module (HSM) to meet compliance requirements. Which Azure service provides HSM-backed key storage?
⚠ Common exam trap
Many exam-takers assume the Standard tier of Key Vault uses HSMs because it is a 'key vault,' but only the Premium tier and Managed HSM provide dedicated HSM hardware for compliance requirements.
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 Premium tier or Managed HSM
Azure Key Vault Premium tier and Azure Managed HSM both provide FIPS 140-2 Level 3 validated hardware security modules (HSMs) for storing sensitive encryption keys. The Standard tier of Key Vault uses software-backed keys and does not meet compliance requirements that mandate dedicated HSM hardware. Managed HSM offers single-tenant, fully managed HSM appliances with higher throughput and key isolation, making it the correct choice for HSM-backed key storage.
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 Standard tier
Why it's wrong here
Azure Key Vault Standard tier is a cloud key management service, but it stores keys and secrets in software, protected by the Azure platform using FIPS 140-2 Level 1 validated keys, not in dedicated hardware security modules. The Premium tier (or Managed HSM) is required to get HSM-backed key operations and the compliance benefits of hardware-bound keys, such as FIPS 140-2 Level 2/3 certification. Standard tier therefore cannot meet a requirement that specifies hardware-backed cryptographic keys.
- ✓
Azure Key Vault Premium tier or Managed HSM
Why this is correct
Azure Key Vault Premium tier and Managed HSM are the only offerings that provide FIPS 140-2 validated HSM-backed key storage for customer-managed keys. Key Vault Premium uses shared HSMs (validated at Level 2) and supports cryptographic operations without keys leaving the HSM boundary. Managed HSM goes further with dedicated, single-tenant HSM partitions validated at Level 3, making it the right choice for the most demanding regulatory or sovereignty requirements. This is why they are correct for HSM-backed key protection.
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Azure Storage with encryption at rest
Why it's wrong here
Azure Storage encryption at rest protects data by encrypting it before it is written to disks, using envelope encryption with keys managed by Azure or the customer. However, this service is not a key vault: it depends on Azure Key Vault or Managed HSM to store any customer-managed keys, and by default uses Microsoft-managed keys, not HSM-backed customer keys. Its purpose is data confidentiality for stored objects, not cryptographic key safeguarding.
- ✗
Azure Active Directory
Why it's wrong here
Azure Active Directory (now Entra ID) handles identity and access management—authenticating users, enabling single sign-on, and applying conditional access policies. It does not provide a general-purpose cryptographic key service or HSM-backed storage for customer-managed keys; the signing keys and secrets it uses are internal platform operations. Thus, it is categorically different from a key vault and cannot satisfy the requirement for HSM-protected customer keys.
Go deeper
Related to this question
Learn chapter
Azure Regions and Geographies
Key term
Security
Security in IT is the practice of protecting systems, networks, and data from unauthorized access, damage, or theft.
Key term
Azure Key Vault
Azure Key Vault is a cloud service for securely storing and managing sensitive information like passwords, encryption keys, and certificates.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This AZ-900 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-900 exam.