Question 1,258 of 1,250
SC-900 Practice Question: Describe the capabilities of Microsoft compliance solutions
A company wants to create a sensitivity label called 'Highly Confidential' in Microsoft 365. When applied to a document, the label should automatically encrypt the document and restrict access to employees in the finance department only. Which Microsoft Purview solution should the administrator use to configure this label?
⚠ Common exam trap
It's easy for candidates to confuse Microsoft Purview Information Protection with Data Lifecycle Management, mistakenly thinking retention labels can enforce encryption, when in fact only sensitivity labels can apply protection actions like encryption and access control.
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
✓
Microsoft Purview Information Protection
Microsoft Purview Information Protection is the correct solution because it provides the ability to create and configure sensitivity labels that enforce protection actions such as encryption and access restrictions. When a 'Highly Confidential' label is applied, it can automatically encrypt the document using Azure Rights Management (Azure RMS) and restrict access to only members of the finance department via a defined permission policy.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Microsoft Purview Data Lifecycle Management
Why it's wrong here
Microsoft Purview Data Lifecycle Management focuses on managing the lifecycle of data for retention and deletion purposes. It utilizes retention labels to define how long content should be kept or when it should be disposed of, ensuring compliance with data retention policies. This service does not provide capabilities for applying encryption, visual markings, or access restrictions to documents based on their sensitivity.
- ✓
Microsoft Purview Information Protection
Why this is correct
Microsoft Purview Information Protection is the correct service for creating and managing sensitivity labels, which classify and protect sensitive data. These labels can be configured to apply encryption, visual markings like headers or footers, and granular access restrictions to content, regardless of where it is stored or shared. This comprehensive approach ensures that sensitive information remains protected throughout its lifecycle, aligning with data governance policies.
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Microsoft Purview Compliance Manager
Why it's wrong here
Microsoft Purview Compliance Manager is a workflow-based solution designed to help organizations manage their compliance posture. It provides pre-built assessment templates for various regulations and industry standards, allowing users to track progress on improvement actions and generate a compliance score. While crucial for overall compliance, it does not directly configure or deploy sensitivity labels for data classification and protection.
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Microsoft Purview Audit
Why it's wrong here
Microsoft Purview Audit is primarily a logging and monitoring solution that records user and administrator activities across Microsoft 365 services. It enables security and compliance teams to investigate forensic events, track changes to configurations, and monitor for suspicious activities. This service is essential for accountability and incident response but does not offer functionality to create, configure, or apply sensitivity labels or encryption policies to content.
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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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