Defining Sensitivity Labels in Microsoft 365: A Foundation for Robust Information Protection

Information protection is at the core of any modern enterprise’s security strategy. As organizations face increasing regulatory requirements and evolving cyber threats, managing and securing data across various collaboration tools has become essential. Microsoft 365 offers Sensitivity Labels as a powerful classification mechanism that enables organizations to enforce security policies directly at the document, email, or container (e.g., Teams, SharePoint sites) level.

What Are Sensitivity Labels?

Sensitivity labels are a metadata-driven classification tool in Microsoft Purview Information Protection that allows organizations to label and protect content based on its sensitivity. Once applied, labels can enforce policies like:

• Encryption (e.g., restrict access to specific users)
• Content marking (e.g., headers, footers, watermarks)
• Access controls (e.g., restricting sharing or printing)
• Automatic classification using data loss prevention (DLP)

These labels are persistent and travel with the content, ensuring protection across devices, apps, and platforms.

Step-by-Step: Defining Your Sensitivity Labels

1. Assess and Plan Label Taxonomy

Start by evaluating your data governance needs and defining a taxonomy of labels that reflects your organization’s information hierarchy. A common model includes:

• Public – Information intended for public consumption
• Internal – Content shared only within the organization
• Confidential – Sensitive business data, limited to specific departments
• Highly Confidential – Regulated or critical information like PII or IP

2. Create Labels in Microsoft Purview Compliance Portal

Navigate to the Microsoft Purview compliance portal:
https://compliance.microsoft.com/informationprotection
From here, under Information Protection, select Labels and create a new label.

For each label, define:

• Name and Description
• Encryption settings (if applicable)
• Content marking preferences
• Auto-labeling rules (optional)
• Scope (e.g., files, emails, containers)

3. Publish Labels via Label Policies

Labels must be published to users through policies. A policy determines:

• Who can see the labels (users/groups)
• Default label behavior
• Mandatory labeling enforcement
• Justification for downgrading labels

Go to Label policies, add the desired labels, assign to user groups, and configure the policy settings.

4. Test Labels Before Broad Rollout

Before rolling out sensitivity labels organization-wide:

• Test them with pilot groups
• Monitor behavior in apps like Word, Outlook, Teams
• Review user feedback and audit logs

5. Monitor and Optimize

Use Activity Explorer and Audit Logs in Microsoft Purview to track how labels are used and detect anomalies. Refine your classification taxonomy and enforcement policies based on real usage data.

Use Cases for Sensitivity Labels

Market Relevance and Microsoft’s Position

Microsoft’s approach to sensitivity labeling is tightly integrated with its Zero Trust security model and the Microsoft Purview suite. Compared to solutions from other vendors like Symantec DLP or McAfee Total Protection, Microsoft offers deeper native integration across Office 365, Azure, and endpoint protection via Microsoft Defender.

As organizations move toward unified data governance, Microsoft Sensitivity Labels act as a foundational building block that supports compliance, data loss prevention (DLP), insider risk management, and secure collaboration.

Summary Table