- A
Assign a new policy with the 'Audit' effect at the Development management group to override the Deny effect.
Why wrong: Incorrect. Policy effects are not overridden by less restrictive effects at a child scope. The Deny policy from the parent management group still applies to Development subscriptions because policy inheritance is cumulative. An Audit policy does not prevent the Deny from blocking encryption-free storage accounts.
- B
Remove the policy assignment from the root management group and assign it individually to each Production subscription.
Why wrong: Incorrect. While this would technically allow Development subscriptions to not have the policy, it negates the benefit of management groups and increases administrative overhead. It also does not address the need to keep the policy enforced for Production. Azure Policy exemptions provide a cleaner, more scalable approach.
- C
Create an Azure RBAC role assignment that grants the Development team permission to bypass the policy.
Why wrong: Incorrect. Azure Policy and Azure RBAC are separate. RBAC controls who can make changes to resources, but it does not bypass policy effects. Even if a user has Owner permissions, Azure Policy with Deny effect will block non-compliant resource creation regardless of RBAC.
- D
Create an Azure Policy exemption for the Development management group with the 'Mitigated' category.
Correct. Azure Policy exemptions allow you to exclude a specific scope from policy evaluation. By creating an exemption at the Development management group, the Deny policy from the Production management group will no longer apply to Development subscriptions. The policy remains fully enforced for Production.
Quick Answer
The answer is to create an Azure Policy exemption for the Development management group with the 'Mitigated' category. This is correct because an Azure Policy exemption allows you to exclude a specific scope—such as a child management group—from a policy assignment’s enforcement without altering the original assignment. By applying the exemption at the Development management group level, the 'Deny' effect on encryption remains active for Production, while Development is granted a justified exception for its temporary test data. On the AZ-900 exam, this scenario tests your understanding of how Azure Policy exemption scope works to manage compliance exceptions at scale, often appearing as a trap where candidates mistakenly try to reassign or modify the policy. A key memory tip: think of 'Mitigated' as meaning the risk is acknowledged and accepted—like a temporary workaround—rather than fully compliant.
AZ-900 Describe Azure management and governance Practice Question
This AZ-900 practice question tests your understanding of describe azure management and governance. 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 has a root management group that contains two child management groups: Production and Development. Each child management group contains several subscriptions. The security team assigns a built-in Azure Policy definition with the 'Deny' effect to the Production management group to enforce encryption on all storage accounts. Later, the Development team requests that storage accounts in their subscriptions must not be encrypted because they host temporary test data that needs to be quickly deleted and recreated. The security team must allow this exception for Development only, without changing the policy for Production. What should the security team do?
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
Create an Azure Policy exemption for the Development management group with the 'Mitigated' category.
Option D is correct because Azure Policy exemptions allow specific scopes (like the Development management group) to be excluded from a policy assignment's effect without modifying the original assignment. The 'Mitigated' category is used when a policy's intent is addressed by another method or when an exception is justified, such as for temporary test data that requires no encryption. This preserves the Deny effect for Production while permitting Development to have unencrypted storage accounts.
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.
- ✗
Assign a new policy with the 'Audit' effect at the Development management group to override the Deny effect.
Why it's wrong here
Incorrect. Policy effects are not overridden by less restrictive effects at a child scope. The Deny policy from the parent management group still applies to Development subscriptions because policy inheritance is cumulative. An Audit policy does not prevent the Deny from blocking encryption-free storage accounts.
- ✗
Remove the policy assignment from the root management group and assign it individually to each Production subscription.
Why it's wrong here
Incorrect. While this would technically allow Development subscriptions to not have the policy, it negates the benefit of management groups and increases administrative overhead. It also does not address the need to keep the policy enforced for Production. Azure Policy exemptions provide a cleaner, more scalable approach.
- ✗
Create an Azure RBAC role assignment that grants the Development team permission to bypass the policy.
Why it's wrong here
Incorrect. Azure Policy and Azure RBAC are separate. RBAC controls who can make changes to resources, but it does not bypass policy effects. Even if a user has Owner permissions, Azure Policy with Deny effect will block non-compliant resource creation regardless of RBAC.
- ✓
Create an Azure Policy exemption for the Development management group with the 'Mitigated' category.
Why this is correct
Correct. Azure Policy exemptions allow you to exclude a specific scope from policy evaluation. By creating an exemption at the Development management group, the Deny policy from the Production management group will no longer apply to Development subscriptions. The policy remains fully enforced for Production.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates confuse Azure Policy exemptions with RBAC permissions or think that a child-scope policy assignment can override a parent-scope Deny effect, when in reality policy inheritance is cumulative and the most restrictive effect always wins unless an explicit exemption is created.
Detailed technical explanation
How to think about this question
Azure Policy exemptions are stored as separate resources under the policy assignment and can be scoped to a management group, subscription, or resource group. The 'Mitigated' category indicates that the risk is addressed by other controls (e.g., data lifecycle policies for temporary test data), while the 'Waiver' category is for full acceptance of risk. Exemptions have an expiration date, ensuring temporary exceptions are reviewed periodically, which is critical for compliance auditing.
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
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FAQ
Questions learners often ask
What does this AZ-900 question test?
Describe Azure management and governance — This question tests Describe Azure management and governance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Create an Azure Policy exemption for the Development management group with the 'Mitigated' category. — Option D is correct because Azure Policy exemptions allow specific scopes (like the Development management group) to be excluded from a policy assignment's effect without modifying the original assignment. The 'Mitigated' category is used when a policy's intent is addressed by another method or when an exception is justified, such as for temporary test data that requires no encryption. This preserves the Deny effect for Production while permitting Development to have unencrypted storage accounts.
What should I do if I get this AZ-900 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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Same concept, more angles
1 more ways this is tested on AZ-900
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A company has a root management group containing three subscriptions: Production, Development, and Sandbox. The governance team assigns an Azure Policy initiative to the root management group that enforces tagging requirements. The Sandbox subscription is used for experimental testing and needs to be temporarily excluded from the tagging requirements while the team evaluates a new tagging schema. The team must ensure the policy assignment remains active in Production and Development but does not affect resources in Sandbox. Which Azure Policy feature should the team use?
medium- ✓ A.Policy Exemption
- B.Policy Remediation
- C.Policy Exclusion
- D.Policy Override
Why A: Option A is correct because a Policy Exemption allows the team to exclude a specific scope (the Sandbox subscription) from the enforcement of an Azure Policy initiative while keeping the policy assignment active at the root management group. This feature is designed for temporary exceptions, such as evaluating a new tagging schema, without modifying the underlying policy assignment or creating exclusions at the resource level. The exemption can be set with an expiration date, ensuring the Sandbox subscription automatically returns to compliance after the evaluation period.
Last reviewed: Jun 11, 2026
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