SC-900 Practice Question: Describe the capabilities of Microsoft compliance solutions
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?
⚠ Common exam trap
Test-takers frequently confuse DLP policies with sensitivity labels, but DLP policies only block or warn on sharing actions and do not apply persistent encryption or visual markings like labels.
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 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.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Sensitivity labels with auto-labeling
Why this is correct
Sensitivity labels, particularly when configured with auto-labeling policies, are specifically designed to automatically classify and apply protection to documents containing sensitive information types. These labels can enforce encryption, visual markings, and access restrictions directly on the content, ensuring data is protected both at rest and in transit, precisely meeting the requirement to automatically classify and encrypt documents.
- ✗
Data Loss Prevention (DLP) policies
Why it's wrong here
Data Loss Prevention (DLP) policies primarily function to detect and prevent the unauthorized sharing, transfer, or use of sensitive data by enforcing actions like blocking, auditing, or notifying. While DLP can identify sensitive content, its core purpose is to prevent data exfiltration rather than to automatically classify and apply persistent encryption directly to documents as a primary, inherent protection mechanism.
- ✗
Data Lifecycle Management (retention labels)
Why it's wrong here
Data Lifecycle Management, through the use of retention labels, is a governance solution focused on managing how long content is preserved or when it should be disposed of, based on organizational or regulatory requirements. Retention labels dictate retention and deletion periods but do not provide any capabilities for classifying content based on sensitivity, applying encryption, or enforcing access controls.
- ✗
Audit (Unified Auditing)
Why it's wrong here
Unified Auditing in Microsoft Purview provides a comprehensive record of user and admin activities across various services, offering crucial insights for forensic investigations and compliance monitoring. However, it is a reactive control that logs events *after* they occur; it does not proactively classify documents based on their content, nor does it apply encryption or protection controls directly to the data itself.
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Microsoft Entra ID
Key term
Microsoft Purview
Microsoft Purview is a unified data governance and compliance service that helps organizations discover, manage, and protect their data across on-premises, cloud, and hybrid environments.
Key term
Labels
Labels are descriptive text or tags attached to IT resources to organize, identify, and manage them based on attributes like purpose, environment, or owner.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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.