Data classification in SharePoint is essential for securing sensitive information, ensuring compliance, and maintaining proper governance. It allows organizations to identify, label, and protect data based on its sensitivity level. Microsoft provides various tools such as Sensitivity Labels, Retention Labels, and Information Rights Management (IRM) to implement data classification effectively.
This guide will walk you through step-by-step methods to implement data classification in SharePoint, ensuring your organization’s data remains secure, organized, and compliant.
1. Define Data Classification Categories
Before implementing classification, organizations should define data categories based on business needs and regulatory requirements.
Common Data Classification Levels
✔ Public – Information that can be freely shared.
✔ Internal – Data for internal use only, not meant for the public.
✔ Confidential – Sensitive business data requiring restricted access.
✔ Highly Confidential – Critical data with the strictest security controls (e.g., financial, legal, or personally identifiable information).
Tip: Work with compliance officers to ensure classification aligns with industry regulations (e.g., GDPR, HIPAA, ISO 27001).
2. Enable Sensitivity Labels in Microsoft Purview
Sensitivity Labels allow you to classify and protect content across SharePoint, OneDrive, and Microsoft 365 apps.
How to Enable Sensitivity Labels in SharePoint
1️⃣ Go to Microsoft Purview Compliance Center (https://compliance.microsoft.com)
2️⃣ Click Information Protection ➝ Labels
3️⃣ Click Create a Label and configure:
✔ Name & Description – Define label name (e.g., Confidential, Internal).
✔ Protection Settings – Choose encryption, watermarks, and access restrictions.
✔ Scope – Apply labels to SharePoint sites, files, and emails.
4️⃣ Click Publish Label using Label Policies
5️⃣ Apply labels manually or configure auto-labeling policies
Tip: Users can manually apply labels, or auto-labeling rules can classify data based on content patterns (e.g., detecting credit card numbers).
3. Configure Retention Labels for Data Lifecycle Management
Retention labels help manage data lifecycle by automating retention and deletion policies.
Steps to Set Up Retention Labels in SharePoint
1️⃣ Go to Microsoft Purview Compliance Center
2️⃣ Click Information Governance ➝ Labels
3️⃣ Click Create a Label and configure:
✔ Retention Period – Define retention duration (e.g., retain for 5 years).
✔ Actions – Choose actions after retention (delete, review, archive).
4️⃣ Click Publish Label and assign it to SharePoint sites.
Tip: Use retention labels to prevent accidental deletions and ensure compliance with legal or business policies.
4. Automate Data Classification with Data Loss Prevention (DLP) Policies
DLP policies help detect and restrict sharing of sensitive information based on predefined rules.
Steps to Create a DLP Policy for SharePoint
1️⃣ Go to Microsoft Purview Compliance Center
2️⃣ Click Data Loss Prevention ➝ Policies ➝ Create Policy
3️⃣ Select Regulations or Custom DLP Policy (e.g., GDPR, HIPAA)
4️⃣ Choose SharePoint & OneDrive as the locations to monitor
5️⃣ Configure Sensitive Data Types (e.g., credit card numbers, financial data)
6️⃣ Set Actions – Block sharing or notify users before sending sensitive data
7️⃣ Click Save & Enable Policy
Tip: Use policy tips to educate users when they attempt to share classified data externally.
5. Implement Information Rights Management (IRM) for Document Protection
IRM restricts copying, printing, and downloading of classified documents.
Steps to Enable IRM in SharePoint
1️⃣ Go to SharePoint Admin Center ➝ Sites ➝ Active Sites
2️⃣ Select a document library ➝ Click Library Settings
3️⃣ Click Information Rights Management (IRM)
4️⃣ Enable “Restrict permissions on this library”
5️⃣ Define protection settings (e.g., disable printing, restrict editing)
6️⃣ Click Save
Tip: IRM is essential for preventing unauthorized distribution of classified data.
6. Monitor and Audit Classified Data in SharePoint
To ensure compliance, regularly track and audit classified data usage.
How to Audit Classified Data in SharePoint
1️⃣ Go to Microsoft Purview Compliance Center ➝ Audit
2️⃣ Select Search Audit Logs
3️⃣ Choose the relevant filters:
✔ File Access & Sharing Events
✔ Sensitivity Label Changes
✔ User Activity on Classified Data
4️⃣ Generate reports and analyze risks
Tip: Set up alerts for unauthorized access attempts or sensitive data modifications.
7. Train Employees on Data Classification Policies
User awareness is critical to ensuring effective data classification.
✔ Conduct training sessions on sensitivity labels, DLP, and SharePoint security.
✔ Provide guidelines on how to apply classification labels correctly.
✔ Implement policy reminders and compliance banners in SharePoint sites.
Tip: Use Microsoft Viva Learning to deliver ongoing security awareness training.