- A
Data Loss Prevention (DLP) policy
Why wrong: DLP policies can detect and block sharing of sensitive data but do not automatically apply sensitivity labels or encrypt documents.
- B
Auto-labeling policy for sensitivity labels
Auto-labeling policies automatically apply sensitivity labels, including encryption, based on conditions like the presence of passport numbers, and can be set to not allow override.
- C
Retention policy
Why wrong: Retention policies are used to keep or delete content after a specified period, not to automatically classify or encrypt documents based on content.
- D
Communication compliance policy
Why wrong: Communication compliance policies monitor and control communications (e.g., email, Teams) for inappropriate content, but do not classify or encrypt documents.
Quick Answer
The answer is an auto-labeling policy for sensitivity labels. This is correct because Microsoft Purview’s auto-labeling policy can be configured to automatically apply a sensitivity label—such as “Highly Confidential”—with encryption to documents in SharePoint Online when they contain sensitive data like passport numbers, and crucially, it can be set to enforce mandatory labeling without allowing users to override the classification. On the SC-900 exam, this scenario tests your understanding of how auto-labeling differs from Data Loss Prevention (DLP): DLP blocks sharing but does not apply encryption labels automatically, making auto-labeling the precise solution for automated, non-negotiable classification. A common trap is confusing DLP policies with auto-labeling, so remember that if the requirement is to *apply and enforce a label with encryption*, not just block data, the answer is always the auto-labeling policy. Memory tip: “Auto-labeling automates the label; DLP just blocks the table.”
SC-900 Practice Question: Describe the capabilities of Microsoft compliance solutions
This SC-900 practice question tests your understanding of describe the capabilities of microsoft compliance solutions. 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 HR documents in SharePoint Online. The compliance team wants to automatically apply a sensitivity label that encrypts the document whenever it contains a passport number. They do not want users to be able to override this classification. Which Microsoft Purview solution should they configure?
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
Auto-labeling policy for sensitivity labels
An auto-labeling policy for sensitivity labels can automatically apply a sensitivity label (e.g., 'Highly Confidential') that encrypts documents when they contain sensitive data like passport numbers. This policy can be configured to enforce mandatory labeling without allowing user override, meeting the compliance team's requirement. In contrast, a DLP policy can detect and block sharing of sensitive data but does not apply encryption labels automatically.
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.
- ✗
Data Loss Prevention (DLP) policy
Why it's wrong here
DLP policies can detect and block sharing of sensitive data but do not automatically apply sensitivity labels or encrypt documents.
- ✓
Auto-labeling policy for sensitivity labels
Why this is correct
Auto-labeling policies automatically apply sensitivity labels, including encryption, based on conditions like the presence of passport numbers, and can be set to not allow override.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Retention policy
Why it's wrong here
Retention policies are used to keep or delete content after a specified period, not to automatically classify or encrypt documents based on content.
- ✗
Communication compliance policy
Why it's wrong here
Communication compliance policies monitor and control communications (e.g., email, Teams) for inappropriate content, but do not classify or encrypt documents.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse DLP policies with auto-labeling, assuming DLP can also apply encryption labels, but DLP only detects and blocks actions—it does not automatically classify or encrypt content.
Detailed technical explanation
How to think about this question
Auto-labeling policies in Microsoft Purview use sensitive information types (e.g., passport number regex patterns) to trigger label application via the Microsoft 365 unified labeling client. The label itself can be configured with encryption settings using Azure Rights Management (Azure RMS), which enforces protection at the file level regardless of user action. In a real-world scenario, this ensures that even if a user saves a document locally, the encryption persists, preventing unauthorized access.
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 cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
What to study next
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FAQ
Questions learners often ask
What does this SC-900 question test?
Describe the capabilities of Microsoft compliance solutions — This question tests Describe the capabilities of Microsoft compliance solutions — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Auto-labeling policy for sensitivity labels — An auto-labeling policy for sensitivity labels can automatically apply a sensitivity label (e.g., 'Highly Confidential') that encrypts documents when they contain sensitive data like passport numbers. This policy can be configured to enforce mandatory labeling without allowing user override, meeting the compliance team's requirement. In contrast, a DLP policy can detect and block sharing of sensitive data but does not apply encryption labels automatically.
What should I do if I get this SC-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.
About these practice questions
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Same concept, more angles
1 more ways this is tested on SC-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 financial services company uses Microsoft Purview to manage compliance. They need to automatically apply a 'Confidential' label to all documents containing financial data in SharePoint. What should they configure?
medium- ✓ A.Auto-labeling policy for sensitivity labels
- B.Data classification dashboard
- C.Trainable classifiers for manual labeling
- D.Data Loss Prevention (DLP) policy
Why A: Option C is correct because auto-labeling policies in Microsoft Purview can automatically apply sensitivity labels based on sensitive information types. Option A is wrong because manual labeling requires user action. Option B is wrong because DLP detects but does not apply labels. Option D is wrong because data classification dashboard provides visibility, not automatic labeling.
Last reviewed: Jun 11, 2026
This SC-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 SC-900 exam.
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