Quick Answer
The answer is auto-labeling policies. This is the correct feature because Microsoft Purview Information Protection uses auto-labeling policies to automatically apply sensitivity labels like 'Highly Confidential' to documents based on specific conditions, such as the presence of a custom sensitive information type, and it triggers when files are created or modified—exactly matching the scenario. On the SC-900 exam, this question tests your understanding of how automated classification differs from manual user-driven labeling; a common trap is confusing auto-labeling with Data Loss Prevention (DLP) policies, which block sharing but never apply labels, or with Communication Compliance, which monitors messages. Remember the key distinction: auto-labeling applies the label automatically based on content conditions, while manual labeling requires user clicks. A helpful memory tip is to think "auto-labeling = automatic action on content match," contrasting with DLP's "block" and manual's "user choice."
This SC-900 practice question tests your understanding of describe the capabilities of microsoft compliance solutions. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. 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.
An organization needs to automatically apply a 'Highly Confidential' sensitivity label to all documents that contain a specific custom sensitive information type. The label should be applied when the document is created or modified. Which feature of Microsoft Purview Information Protection should be used?
Manual sensitivity labeling
Why wrong: Manual labeling requires user action, not automatic.
Data Loss Prevention (DLP) policies
Why wrong: DLP policies block sharing but do not apply labels.
Auto-labeling policies
Auto-labeling policies automatically apply labels based on conditions.
Communication Compliance policies
Why wrong: Communication Compliance monitors communications, not document labeling.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Auto-labeling policies
Auto-labeling policies in Microsoft Purview Information Protection can automatically apply sensitivity labels based on conditions, including custom sensitive information types, when documents are created or modified. Manual labeling requires user action. DLP blocks sharing but does not apply labels. Communication Compliance monitors communications.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Manual sensitivity labeling
Why it's wrong here
Manual labeling requires user action, not automatic.
Data Loss Prevention (DLP) policies
Why it's wrong here
DLP policies block sharing but do not apply labels.
Auto-labeling policies
Why this is correct
Auto-labeling policies automatically apply labels based on conditions.
Related concept
Read the scenario before looking for a memorised answer.
Communication Compliance policies
Why it's wrong here
Communication Compliance monitors communications, not document labeling.
Common exam traps
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
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.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
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
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
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..
The correct answer is: Auto-labeling policies — Auto-labeling policies in Microsoft Purview Information Protection can automatically apply sensitivity labels based on conditions, including custom sensitive information types, when documents are created or modified. Manual labeling requires user action. DLP blocks sharing but does not apply labels. Communication Compliance monitors communications.
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.
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 →
Same concept, more angles
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. Arrange the steps to conduct a data classification scan using Microsoft Purview Information Protection.
mediumWhy : Data classification involves creating labels, publishing them, setting auto-labeling rules, running scans, and reviewing results.
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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