- A
Create a DLP policy to detect financial data and block external sharing; use default audit logging
Why wrong: DLP does not automatically label or retain content; no retention policy.
- B
Create a manual labeling policy for users to apply 'Financial' label; create a retention label for 7 years; create a DLP policy to warn on external sharing
Why wrong: Manual labeling is not automatic; retention label is separate from sensitivity label, but the scenario requires automatic labeling.
- C
Create a retention label 'Financial' with auto-apply based on sensitive info type; create a DLP policy to block external sharing
Why wrong: Retention label does not provide encryption; also sensitivity label is needed for encryption.
- D
Create an auto-labeling policy to apply a sensitivity label 'Financial' with encryption; create a retention policy to retain all labeled content for 7 years; create a DLP policy to block external sharing of 'Financial' labeled content with a policy tip; enable audit logging
Auto-labeling applies label automatically; retention policy retains; DLP blocks sharing; audit logging tracks access.
Quick Answer
The correct answer is to create an auto-labeling policy applying a sensitivity label with encryption, a retention policy for 7 years, a DLP policy to block external sharing with a policy tip, and enable audit logging. This configuration works because auto-labeling automatically classifies financial documents as ‘Financial’ using a sensitivity label, while the retention policy ensures those labeled documents are kept for exactly 7 years. The DLP policy then monitors for external sharing attempts and, when triggered, displays a policy tip warning the user and blocks the action if they proceed. On the SC-900 exam, this scenario tests your understanding of how sensitivity labels, retention policies, and DLP policies work together in Microsoft Purview—a common trap is confusing retention labels (which manage deletion) with sensitivity labels (which enforce protection). Remember the memory tip: “Sensitivity secures, Retention retains, DLP blocks and warns.”
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.
Your organization uses Microsoft Purview to manage compliance. You need to ensure that financial documents are automatically labeled as 'Financial' and retained for 7 years. Additionally, if a user tries to share a financial document externally, they must see a policy tip warning them and be blocked if they proceed. You also need to audit all access to financial documents. Which configuration should you implement?
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 auto-labeling policy to apply a sensitivity label 'Financial' with encryption; create a retention policy to retain all labeled content for 7 years; create a DLP policy to block external sharing of 'Financial' labeled content with a policy tip; enable audit logging
Option A: Auto-labeling applies the sensitivity label; a retention policy retains for 7 years; DLP blocks external sharing with policy tip; audit logging is enabled by default. Option B: manual labeling is not automatic; Option C: retention label is not sensitivity; Option D: DLP alone does not automate labeling or retention.
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 DLP policy to detect financial data and block external sharing; use default audit logging
Why it's wrong here
DLP does not automatically label or retain content; no retention policy.
- ✗
Create a manual labeling policy for users to apply 'Financial' label; create a retention label for 7 years; create a DLP policy to warn on external sharing
Why it's wrong here
Manual labeling is not automatic; retention label is separate from sensitivity label, but the scenario requires automatic labeling.
- ✗
Create a retention label 'Financial' with auto-apply based on sensitive info type; create a DLP policy to block external sharing
Why it's wrong here
Retention label does not provide encryption; also sensitivity label is needed for encryption.
- ✓
Create an auto-labeling policy to apply a sensitivity label 'Financial' with encryption; create a retention policy to retain all labeled content for 7 years; create a DLP policy to block external sharing of 'Financial' labeled content with a policy tip; enable audit logging
Why this is correct
Auto-labeling applies label automatically; retention policy retains; DLP blocks sharing; audit logging tracks access.
Related concept
Read the scenario before looking for a memorised answer.
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.
Trap categories for this question
Scenario analysis trap
Manual labeling is not automatic; retention label is separate from sensitivity label, but the scenario requires automatic labeling.
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 company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
What to study next
Got this wrong? Here's your next step.
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.
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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: Create an auto-labeling policy to apply a sensitivity label 'Financial' with encryption; create a retention policy to retain all labeled content for 7 years; create a DLP policy to block external sharing of 'Financial' labeled content with a policy tip; enable audit logging — Option A: Auto-labeling applies the sensitivity label; a retention policy retains for 7 years; DLP blocks external sharing with policy tip; audit logging is enabled by default. Option B: manual labeling is not automatic; Option C: retention label is not sensitivity; Option D: DLP alone does not automate labeling or retention.
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.
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Last reviewed: Jun 21, 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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