Question 778 of 1,250
Automatically Classify and Encrypt Documents with Sensitivity Labels
A company wants to automatically classify and protect sensitive documents stored in SharePoint Online. The compliance administrator needs to create a policy that detects credit card numbers and applies encryption. Which Microsoft Purview solution should the administrator use?
Quick Answer
The answer is sensitivity labels with auto-labeling. This Microsoft Purview solution is correct because it enables a compliance administrator to create an auto-labeling policy that automatically detects sensitive data types, such as credit card numbers, and then applies the appropriate sensitivity label to classify and encrypt the document in SharePoint Online. On the SC-900 exam, this question tests your understanding of Microsoft Purview Information Protection versus other solutions; a common trap is confusing auto-labeling with Data Lifecycle Management, which handles retention and deletion, not automatic encryption. Remember that auto-labeling is about proactive protection—it scans content in transit or at rest and applies labels based on conditions you define. A helpful memory tip: think of “auto-labeling” as the “automatic protector” that both classifies and encrypts, while other tools like Communication Compliance only monitor, and Entra ID only manages identities.
⚠ Common exam trap
On the SC-900 exam, candidates often confuse the distinction between auto-labeling (which applies labels and encryption automatically to sensitive data at rest) and Communication Compliance (which monitors communications for policy violations). This leads to incorrectly selecting Communication Compliance for data protection tasks.
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
✓
Sensitivity labels with auto-labeling
Sensitivity labels with auto-labeling (Option B) is the correct Microsoft Purview solution because it allows the compliance administrator to create a policy that automatically detects sensitive data types, such as credit card numbers, and applies encryption to documents in SharePoint Online. This feature uses trainable classifiers or sensitive information types to scan content at rest and automatically assign a label that enforces protection actions like encryption, meeting the requirement without manual user intervention.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Communication Compliance
Why it's wrong here
Communication Compliance monitors communications for compliance, not document classification.
- ✓
Sensitivity labels with auto-labeling
Why this is correct
Sensitivity labels with auto-labeling can automatically classify and encrypt documents based on sensitive content.
- ✗
Microsoft Entra ID
Why it's wrong here
Microsoft Entra ID is an identity and access management service, not a compliance solution for document protection.
- ✗
Data Lifecycle Management
Why it's wrong here
Data Lifecycle Management manages retention and deletion, not automatic classification and encryption.
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Same concept, more angles
2 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 healthcare organization needs to automatically classify documents containing patient health information (PHI) in Microsoft SharePoint. The solution should apply a 'Confidential - Healthcare' sensitivity label to any document that matches the HIPAA content pattern. Which Microsoft Purview feature should be used?
easy- A.Retention label auto-apply
- B.Manual sensitivity labeling
- C.Data loss prevention (DLP) policy
- ✓ D.Auto-labeling for sensitivity labels
Why D: Auto-labeling for sensitivity labels (Option D) is correct because it automatically applies the specified sensitivity label to documents that match a defined pattern (e.g., HIPAA content) in SharePoint. Option A is wrong because retention label auto-apply is for retention, not sensitivity. Option B is wrong because manual labeling requires user action and does not auto-classify. Option C is wrong because DLP policies enforce rules to prevent data loss, they do not apply sensitivity labels.
Variation 2. A financial services organization needs to automatically classify and protect sensitive documents containing credit card information in SharePoint Online and OneDrive for Business. They want a purple-colored label to be applied automatically when the document is saved, and the document should be encrypted with a predefined template that restricts editing to internal users only. Which Microsoft Purview solution should they configure?
hard- ✓ A.Sensitivity labels with auto-labeling
- B.Data Loss Prevention (DLP) policies
- C.Data Lifecycle Management (retention labels)
- D.Audit (Unified Auditing)
Why A: Sensitivity labels with auto-labeling in Microsoft Purview can automatically apply a purple-colored label to documents containing credit card information when saved in SharePoint Online or OneDrive for Business. This label can be configured with encryption using a predefined template that restricts editing to internal users only, meeting the organization's classification and protection requirements.
Last reviewed: Jul 4, 2026
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