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Home » AI Learning Center » What are Sensitivity Labels?

What are Sensitivity Labels?

Sensitivity labels are basically digital sticky notes for your files and emails. They tell everyone – and every system – how sensitive a piece of content is and what can (or can’t) be done with it.

Think of it like the markings on a physical folder in an old-school office. One folder might be stamped “Public,” another “Confidential – Do Not Copy.” Sensitivity labels do the same thing, but they live inside your Microsoft 365 environment and travel with the file wherever it goes.

A typical label setup looks something like this:
  • Encrypt the file so only authorized people can open it
  • Block forwarding, printing, or copying
  • Block forwarding, printing, or copying
  • Trigger alerts if someone tries to share it the wrong way
Why this matters for Copilot.

Here’s the kicker. When Copilot pulls information from your files to answer a prompt, it respects sensitivity labels. If a document is marked Confidential and encrypted, Copilot honors those rules. The output stays protected, too. So if Copilot summarizes a confidential file into a new document, that summary can inherit the same label automatically.

Getting started doesn't have to be complicated
Most businesses start with three or four labels – not twenty. Keep it simple, train your staff on what each one means, and apply them consistently. Overcomplicating it is the fastest way to get nobody using them at all.

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