What is sensitivity labeling, and how does it help protect data in Fabric?

• A. Sensitivity labeling classifies data by color coding for UI only.
• B. Sensitivity labeling classifies data by privacy level (public, confidential, restricted) to enforce access controls, data masking, and governance policies.
• C. Sensitivity labeling assigns encryption keys to datasets.
• D. Sensitivity labeling is optional metadata with no governance impact.

Answer: (B)

Sensitivity labeling marks data with a privacy level so Fabric can automatically apply protections. By tagging data with levels like public, confidential, or restricted, the system knows how to treat it and which protections to enforce. This includes access controls—ensuring only authorized users can view or work with the data—and data masking, so sensitive fields are hidden or obfuscated for users without the proper rights. It also ties into governance policies, enabling rules around data sharing, retention, and auditing across Fabric assets. So, labeling isn’t just cosmetic; it drives policy enforcement and protects data across the platform. It’s not merely UI color coding, it isn’t about assigning encryption keys, and it isn’t optional metadata with no governance impact.