SC-900 Data Loss Prevention (DLP) Practice Question
You are the security administrator for a large healthcare organization that uses Microsoft 365 E5. The organization must comply with HIPAA and GDPR regulations. You have implemented Microsoft Purview Information Protection with sensitivity labels to classify and protect patient data. Recently, the compliance team identified that some documents containing Protected Health Information (PHI) are being shared externally without protection. You need to prevent users from sharing documents classified as 'Highly Confidential' with external users unless the document is encrypted and labeled. Additionally, you must ensure that any external sharing of such documents is automatically blocked. You have the following options available. Which action should you take?
⚠ Common exam trap
SC-900 often tests the distinction between classification (labels) and enforcement (DLP), leading candidates to choose auto-labeling when the requirement is actually to block sharing.
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 a data loss prevention (DLP) policy in Microsoft Purview that detects the 'Highly Confidential' label and blocks sharing with external users
A Microsoft Purview Data Loss Prevention (DLP) policy can detect documents that carry the 'Highly Confidential' sensitivity label and enforce actions such as blocking external sharing. This directly addresses the requirement to automatically block external sharing of documents classified as 'Highly Confidential'. DLP policies work across SharePoint, OneDrive, Exchange, and Teams, providing the enforcement layer that labels alone do not. Note: DLP blocks sharing based on the label; it does not itself apply encryption or labels. The 'encrypted and labeled' condition is handled by the sensitivity label and its encryption settings, not by the DLP 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.
- ✗
Configure auto-labeling for SharePoint to automatically apply the 'Highly Confidential' label to all documents containing PHI
Why it's wrong here
Auto-labeling applies sensitivity labels automatically but does not block external sharing; it only labels the content.
- ✓
Create a data loss prevention (DLP) policy in Microsoft Purview that detects the 'Highly Confidential' label and blocks sharing with external users
Why this is correct
A Microsoft Purview DLP policy can use the sensitivity label as a condition and block external sharing of labelled content, enforcing protection at the point of sharing across workloads. This satisfies the requirement to prevent unprotected external sharing of Highly Confidential documents.
- ✗
Configure a conditional access policy in Microsoft Entra ID to block external access to SharePoint sites containing PHI
Why it's wrong here
Conditional access policies control access to resources based on user, device, or location, not document labels.
- ✗
Create a retention policy for SharePoint that prevents deletion of documents with the 'Highly Confidential' label
Why it's wrong here
Retention policies are used to retain or delete documents, not to control sharing permissions.
Go deeper
Related to this question
Learn chapter
Microsoft Entra Password Protection
Key term
Sensitivity label
A sensitivity label is a metadata tag applied to digital content that classifies the content's level of confidentiality and governs how it can be shared, protected, and accessed.
Key term
DLP
Data Loss Prevention — security technology that detects and prevents unauthorised transmission of sensitive data outside an organisation.
About these practice questions
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Microsoft exam blueprint
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.