The answer is to create an auto-labeling policy for sensitivity labels. This is correct because an auto-labeling policy in Microsoft Purview can be configured to scan SharePoint Online documents for sensitive data types, such as a passport number, and automatically apply a 'Highly Confidential' sensitivity label that includes encryption. This directly meets the compliance team’s requirement for automatic classification and protection without manual intervention. On the SC-900 exam, this scenario tests your understanding of how sensitivity labels differ from retention labels and DLP policies—a common trap is confusing auto-labeling with a Data Loss Prevention policy, which blocks sharing but does not apply labels. Remember the memory tip: "Auto-labeling applies and encrypts; DLP blocks and alerts."
SC-900 Practice Question: Describe the capabilities of Microsoft security solutions
This SC-900 practice question tests your understanding of describe the capabilities of microsoft security 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 uses Microsoft Purview to classify and label data. The compliance team needs to automatically apply a 'Highly Confidential' sensitivity label to any document containing a passport number that is stored in SharePoint Online. The label should also encrypt the document. What should the compliance team configure?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Create an auto-labeling policy for sensitivity labels
Option D is correct because an auto-labeling policy can be set to scan SharePoint for content containing a passport number and apply a label with encryption. Option A is wrong because manual labeling is not automatic. Option B is wrong because a DLP policy blocks sharing but does not apply labels. Option C is wrong because a retention label is for retention, not encryption.
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.
✗
Create a retention label with a retention rule
Why it's wrong here
Retention labels manage retention, not classification with encryption.
✓
Create an auto-labeling policy for sensitivity labels
Why this is correct
Auto-labeling policies can automatically apply labels with encryption based on sensitive info types.
Related concept
Read the scenario before looking for a memorised answer.
✗
Create a data loss prevention (DLP) policy
Why it's wrong here
DLP policies block sharing but do not apply labels.
✗
Create a manual sensitivity label and train users
Why it's wrong here
Manual labeling requires user action, not automatic.
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 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.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this SC-900 question in full detail.
Identify which SC-900 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.
Describe the capabilities of Microsoft security solutions — This question tests Describe the capabilities of Microsoft security solutions — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Create an auto-labeling policy for sensitivity labels — Option D is correct because an auto-labeling policy can be set to scan SharePoint for content containing a passport number and apply a label with encryption. Option A is wrong because manual labeling is not automatic. Option B is wrong because a DLP policy blocks sharing but does not apply labels. Option C is wrong because a retention label is for retention, not encryption.
What should I do if I get this SC-900 question wrong?
Identify which SC-900 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.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
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 wants to classify and label data in Microsoft SharePoint Online automatically based on content containing passport numbers. Which Microsoft Purview feature should they use?
easy
A.Audit log
B.Data classification dashboard
C.Data loss prevention (DLP) policy
✓ D.Auto-labeling policy
Why D: Correct: Auto-labeling policy in Purview applies labels automatically. Option B: DLP policy prevents sharing. Option C: Data classification dashboard shows classification results. Option D: Audit logs are for activity tracking.
Variation 2. A company uses Microsoft Purview Information Protection to classify and label sensitive documents. The compliance team wants to automatically apply a 'Confidential' label to documents containing an employee's passport number. Which method should they use?
easy
A.Manual labeling by users
B.Trainable classifiers
✓ C.Auto-labeling policy
D.DLP policy
Why C: Auto-labeling in Microsoft Purview uses sensitive info types to automatically apply labels based on content. Option B is wrong because it's manual; Option C is wrong because it's for classification, not labeling; Option D is wrong because it's for DLP.
Variation 3. Your organization uses Microsoft Purview to classify data. You need to automatically apply a 'Confidential' sensitivity label to any document that contains a Social Security number. What should you create?
medium
✓ A.An auto-labeling policy for sensitivity labels
B.A sensitivity label policy with manual labeling
C.A Data Loss Prevention (DLP) policy
D.A retention policy
Why A: Option D is correct because auto-labeling policies in Microsoft Purview can automatically apply sensitivity labels based on sensitive info types like SSN. Option A is wrong because a manual label policy requires user action. Option B is wrong because a DLP policy blocks sharing but doesn't apply labels. Option C is wrong because a retention policy manages data retention, not classification.
Last reviewed: Jun 21, 2026
Question Discussion
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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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