How To Set Up Compliance and Retention Policies in Microsoft 365 for Data Governance

Setting up compliance and retention policies in Microsoft 365 is essential for organizations aiming to meet regulatory requirements, manage data effectively, and ensure data protection. Microsoft 365 provides robust tools for compliance management and data governance, allowing you to define how long data is retained, who can access it, and what to do with it once it’s no longer needed.

This guide provides step-by-step instructions to set up compliance and retention policies in Microsoft 365 to help you govern data efficiently and remain compliant with legal and organizational standards.

Benefits of Compliance and Retention Policies in Microsoft 365

Implementing compliance and retention policies in Microsoft 365 offers several benefits:

• Data Lifecycle Management: Automatically retain or delete data based on predefined rules, ensuring information is accessible only as long as needed.
• Regulatory Compliance: Meet regulatory requirements for data retention, such as GDPR, HIPAA, or SOX.
• Reduced Risk: Minimize data storage risks by ensuring sensitive data is stored or deleted according to policy.
• Enhanced Security: Control who can access and manage data across your organization.

Prerequisites

To set up compliance and retention policies in Microsoft 365, you’ll need:

1. Microsoft 365 Compliance Center Access: Administrator permissions are required to create and manage policies.
2. Compliance and Retention Licensing: Ensure you have the appropriate Microsoft 365 license (e.g., E3, E5, or the relevant Compliance add-ons).
3. Understanding of Compliance Requirements: Familiarity with regulatory requirements relevant to your organization.

Steps to Set Up Compliance and Retention Policies in Microsoft 365

Step 1: Access the Microsoft 365 Compliance Center

1. Go to the Microsoft 365 Compliance Center.
2. Sign in with your administrator account.
3. In the left navigation pane, select Data Lifecycle Management to access retention and compliance settings.

Step 2: Create a Retention Policy

Retention policies allow you to specify how long content is retained or deleted in Microsoft 365. Follow these steps to create a policy.

1. In the Compliance Center, go to Data Lifecycle Management > Retention Policies.
2. Click New retention policy.
3. Name the Policy: Provide a name and description to help identify the policy’s purpose.
4. Choose Locations to Apply the Policy:
   • Exchange Email: Retain or delete emails.
   • SharePoint Sites and OneDrive Accounts: Manage document storage and sharing.
   • Teams Chats and Channels: Apply retention policies to Teams messages.
5. Configure Retention Settings:
   • Choose Retain items for a specific period and specify a duration (e.g., days, months, years).
   • Decide whether to Delete items after the retention period or retain them indefinitely.
6. Click Next to review and save the retention policy.

Once set, the retention policy will apply to data in the specified locations, automatically retaining or deleting content according to your rules.

Step 3: Apply Retention Labels for Specific Content Types

Retention labels provide a more granular approach to data retention by allowing you to tag specific types of content with custom retention rules.

1. In the Compliance Center, go to Data Lifecycle Management > Labels.
2. Click Create a label to start defining a new retention label.
3. Name the Label: Enter a descriptive name and optional description.
4. Set Retention Label Settings:
   • Specify whether to Retain or Delete items.
   • Define how long to retain items tagged with this label and what happens once the retention period expires (e.g., deletion).
5. Publish the Label:
   • Choose which locations (e.g., SharePoint, Teams, Outlook) the label will apply to.
   • Configure user access settings if the label should be available to specific groups or departments.
6. Click Create to finalize and publish the label.

Retention labels can now be applied to documents and emails, providing specific retention periods and policies based on content type.

Step 4: Set Up Data Loss Prevention (DLP) Policies

Data Loss Prevention policies help prevent the accidental sharing of sensitive information by setting restrictions on how specific data types are handled and shared.

1. In the Compliance Center, go to Solutions > Data Loss Prevention.
2. Click Create policy to define a new DLP policy.
3. Choose a template that best fits your needs:
   • Common templates include Financial Data, Health Information, and Privacy Information.
4. Define Policy Scope:
   • Specify which locations the policy will apply to (e.g., Exchange email, SharePoint, OneDrive, Teams).
5. Customize DLP Settings:
   • Define which types of sensitive information (e.g., credit card numbers, social security numbers) the policy should monitor.
   • Set up notifications, alerts, or restrictions for policy violations, such as preventing data from being shared outside the organization.
6. Click Save to create the policy.

DLP policies help protect sensitive data from being shared inappropriately, reducing compliance risk.

Step 5: Implement Information Protection Sensitivity Labels

Sensitivity labels allow you to classify and protect content according to its sensitivity level (e.g., Confidential, Restricted).

1. In the Compliance Center, go to Information Protection > Sensitivity.
2. Click Create label to start defining a sensitivity label.
3. Configure Label Settings:
   • Name the label (e.g., Confidential) and provide a description.
   • Set protection settings, such as encryption, access restrictions, and visual markings (e.g., watermark).
4. Apply Label Scope:
   • Choose the types of files and content that can be labeled (e.g., emails, documents).
5. Publish the Label:
   • Make the label available to specific groups or departments as needed.
6. Click Save to activate the label.

Sensitivity labels enable secure access control and data classification, which helps meet compliance requirements for data security.

Step 6: Monitor Compliance with Audit Logs and Reports

After setting up policies, regularly monitor compliance using audit logs and reports.

1. In the Compliance Center, go to Audit.
2. Use Search to find specific activities or compliance events.
3. Review logs to identify potential policy violations or data access issues.
4. Set up alerts for unusual activities, such as unauthorized access attempts or policy violations.

Regular monitoring ensures compliance adherence and allows you to address potential issues proactively.

Best Practices for Setting Up Compliance and Retention Policies

1. Align Policies with Regulatory Requirements: Tailor retention and compliance policies based on applicable regulations (e.g., GDPR, HIPAA).
2. Use Retention Labels for Specific Data Types: Labels provide flexibility by allowing policies to apply only to specific content types.
3. Implement Data Loss Prevention Policies: Protect sensitive data by configuring DLP policies that prevent unauthorized sharing.
4. Regularly Review Policies: Periodically audit and adjust policies to stay current with evolving compliance standards.
5. Train Employees on Policy Use: Educate staff on applying labels, adhering to retention policies, and managing sensitive data securely.

Frequently Asked Questions Related to Setting Up Compliance and Retention Policies in Microsoft 365