- A
A sensitivity label with encryption settings
Correct. The sensitivity label must define the protection (encryption) that will be applied to documents containing credit card numbers.
- B
A DLP policy that detects sensitive info
Why wrong: Incorrect. DLP policies are focused on actions like blocking or notifying when sensitive data is shared. Auto-labeling is accomplished via a separate auto-labeling policy, not DLP.
- C
An auto-labeling policy
Correct. The auto-labeling policy applies the sensitivity label automatically to documents that match specified conditions (e.g., containing a credit card number).
- D
A data classification dashboard
Why wrong: Incorrect. The data classification dashboard provides reports and visibility into classified data, but it does not perform automatic labeling.
Quick Answer
The answer is a sensitivity label with encryption configured and an auto-labeling policy. The auto-labeling policy is responsible for automatically detecting credit card numbers within documents and applying the designated label, while the sensitivity label itself must have encryption settings enabled within its protection settings to ensure the document is encrypted upon application. On the SC-900 exam, this tests your understanding of how Microsoft Purview Information Protection combines detection rules with protection actions; a common trap is assuming the auto-labeling policy alone handles encryption, when in fact the label’s encryption must be pre-configured separately. Remember the pairing: the policy detects and applies, the label protects and encrypts—think of it as “policy pulls the trigger, label loads the bullet.”
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.
A company wants to automatically apply a 'Confidential' sensitivity label to any document that contains a credit card number, and also encrypt the document as part of the label. Which two components must be configured to achieve this? (Choose two.)
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
A sensitivity label with encryption settings
Option A is correct because a sensitivity label must include encryption settings to automatically encrypt documents when the label is applied. The encryption is configured within the label's protection settings, which defines how content is protected (e.g., with a predefined template or user-defined permissions). Without encryption configured in the label, the automatic application would only assign the label without encrypting the document.
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.
- ✓
A sensitivity label with encryption settings
Why this is correct
Correct. The sensitivity label must define the protection (encryption) that will be applied to documents containing credit card numbers.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
A DLP policy that detects sensitive info
Why it's wrong here
Incorrect. DLP policies are focused on actions like blocking or notifying when sensitive data is shared. Auto-labeling is accomplished via a separate auto-labeling policy, not DLP.
- ✓
An auto-labeling policy
Why this is correct
Correct. The auto-labeling policy applies the sensitivity label automatically to documents that match specified conditions (e.g., containing a credit card number).
Related concept
Read the scenario before looking for a memorised answer.
- ✗
A data classification dashboard
Why it's wrong here
Incorrect. The data classification dashboard provides reports and visibility into classified data, but it does not perform automatic labeling.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse DLP policies with auto-labeling policies, thinking DLP can apply labels and encryption, but DLP only detects and acts on content (e.g., block or notify) and does not apply sensitivity labels.
Detailed technical explanation
How to think about this question
Auto-labeling policies in Microsoft Purview use conditions based on sensitive info types (e.g., credit card numbers) to automatically apply a sensitivity label. The label itself must have encryption enabled via Azure Rights Management (Azure RMS) to enforce protection; without this, the label is merely a metadata tag. In a real-world scenario, a company might combine a DLP policy to block external sharing of unlabeled credit card data, but the auto-labeling policy is the mechanism that applies the label and encryption.
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.
TExam Day Tips
- 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.
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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: A sensitivity label with encryption settings — Option A is correct because a sensitivity label must include encryption settings to automatically encrypt documents when the label is applied. The encryption is configured within the label's protection settings, which defines how content is protected (e.g., with a predefined template or user-defined permissions). Without encryption configured in the label, the automatic application would only assign the label without encrypting the document.
What should I do if I get this SC-900 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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 →
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 company wants to automatically apply a 'Confidential' sensitivity label to all documents containing credit card numbers. Which Microsoft Purview feature should be used to create the auto-labeling policy?
easy- A.Microsoft Purview Data Loss Prevention
- B.Microsoft Purview Communication Compliance
- C.Microsoft Purview Data Lifecycle Management
- ✓ D.Microsoft Purview Auto-labeling policies
Why D: Option D is correct because auto-labeling policies in Microsoft Purview can automatically apply sensitivity labels based on sensitive info types. Option A is wrong because DLP policies protect data, not label. Option B is wrong because Data Lifecycle Management handles retention. Option C is wrong because Communication Compliance monitors communications.
Variation 2. An organization needs to automatically apply a 'Confidential' label to documents that contain EU personal data, and also encrypt those documents. Which Microsoft Purview feature should they configure?
medium- A.Data Loss Prevention (DLP) policy
- B.Retention label policy
- C.Data classification service
- ✓ D.Auto-labeling policy
Why D: Auto-labeling policies can be configured to automatically apply sensitivity labels based on sensitive info types like EU personal data. Sensitivity labels support encryption. Data classification is a prerequisite, but auto-labeling is the feature that applies the label automatically.
Last reviewed: Jun 11, 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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