How Does Microsoft Data Loss Prevention (DLP) Work for Your Business?

Carl Johnston

Senior Cabling Engineer

January 22, 2025

More than half of businesses—51%, to be exact—that experience data loss shut down within just two years. This alarming statistic highlights the critical need for robust data security measures in today’s digital landscape.

That’s where Microsoft Data Loss Prevention (DLP) comes in. It provides the tools and strategies businesses need to protect sensitive data and ensure long-term success.

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What is Microsoft Data Loss Prevention?

What is data loss prevention, and how does it work?

Data Loss Prevention (DLP) refers to a set of tools and strategies designed to protect sensitive data from unauthorised access, accidental leaks, or intentional misuse.

DLP solutions ensure the security of critical information—such as financial data, credit card numbers, and personal identification—by identifying, monitoring, and controlling it in transit, at rest, or in use.

DLP works by analysing data within a business, applying predefined policies to detect sensitive information, and enforcing controls to prevent unauthorised sharing or leakage.

For instance, when a Microsoft Data Loss Prevention policy detects sensitive data such as Social Security numbers being shared outside of an organisation’s secure network, it can automatically block the transfer and alert administrators.

Microsoft’s implementation of DLP provides extensive tools and integrations to meet data protection requirements effectively across its ecosystem.

What is Microsoft Data Loss Prevention (DPL)?

Microsoft Data Loss Prevention (DLP) is a robust solution integrated into the Microsoft 365 and Office 365 platforms. It is designed to help businesses secure sensitive data across services such as Teams, SharePoint, OneDrive, and Exchange Online.

By using Microsoft Purview Data Loss Prevention and Microsoft Defender, businesses can create and enforce comprehensive policies that prevent data leakage and ensure compliance with data protection regulations.

Microsoft DLP offers an advanced policy configuration system that includes templates for protecting sensitive information like credit card numbers, financial data, and personal health records.

Through the Microsoft Purview Compliance Portal, administrators can manage DLP policies, monitor DLP alerts, and review reports on data security incidents.

Microsoft Data Loss Prevention (DLP) is available through various Microsoft 365 plans, each offering different features and pricing to accommodate diverse organisational needs.

Microsoft 365 E5

The Microsoft 365 E5 plan provides comprehensive DLP capabilities, including advanced security, compliance, and analytics features. As of January 2025, the E5 plan is priced at $57 per user per month. 

Microsoft 365 E3

The Microsoft 365 E3 plan includes essential DLP features suitable for many businesses. The E3 plan is priced at $36 per user per month. 

Microsoft 365 Business Premium

For small to medium-sized businesses, Microsoft 365 Business Premium offers DLP functionalities tailored to their requirements. This plan is available at $22 per user per month.

Types of Microsoft Data Loss Prevention tools

Three types of data loss prevention of Microsoft 365

Let’s break down the three main types of DLP and how they help secure your organisation’s most valuable data.

1. Network data loss prevention

Network DLP focuses on monitoring and controlling sensitive data as it moves across a network. By analysing data packets, this type of DLP ensures that confidential information does not leave a business’s secure environment.

For instance, businesses can use network DLP to monitor outbound emails for sensitive attachments and automatically block their transfer to unauthorised recipients.

Microsoft Data Loss Prevention integrates network DLP capabilities through tools like Exchange Online and Teams, enabling real-time data monitoring across collaboration platforms.

2. Endpoint data loss prevention

Endpoint DLP addresses data security at the device level, ensuring sensitive information is not misused or shared via local storage, USB drives, or external devices.

For example, if an employee attempts to copy sensitive files to an external drive, endpoint DLP policies can block the action and generate an alert.

Microsoft Defender for Endpoint plays a key role here, offering extensive coverage for endpoint devices across a business. Administrators can configure DLP policies to monitor activities on Windows devices and other supported platforms.

3. Cloud data loss prevention

Cloud DLP focuses on securing sensitive information stored or processed in cloud environments. With the rise of cloud computing, organisations face increased risks of data breaches if cloud-based services are not adequately protected.

Microsoft Purview DLP ensures sensitive data in cloud applications, like OneDrive and SharePoint, is secured.

By integrating with Microsoft Defender for Cloud Apps, businesses can enforce policies to monitor and control the sharing of sensitive data across cloud platforms.

Difference between DLP and EDR

The distinction between Microsoft Data Loss Prevention (DLP) and Endpoint Detection and Response (EDR) lies in their purposes and approaches to data security. Below are the key differences:

  • Purpose:
    • DLP is focused on preventing data leakage by monitoring and controlling the flow of sensitive information.
    • EDR is designed to detect and respond to security threats, such as malware or unauthorised access, on endpoint devices.
  • Primary functionality:
    • DLP prevents the accidental or intentional sharing of sensitive data.
    • EDR identifies, investigates, and mitigates endpoint security incidents.
  • Scope:
    • DLP applies to data in transit, at rest, and in use across an organisation’s network and services.
    • EDR is limited to endpoint devices and their associated activities.
  • Example:
    • DLP might block an email containing a credit card number from being sent to an external address.
    • EDR might detect and quarantine a malicious file on an employee’s laptop.

By combining DLP and EDR, businesses can achieve a comprehensive data security strategy, ensuring both data protection and threat detection.

Why your business needs a Microsoft Data Loss Prevention tool

7 benefits of DLP solutions for your Microsoft security

Discover how Microsoft Data Loss Prevention (DLP) can revolutionise the way your business protects sensitive data.

1. Full protection across platforms

Microsoft Data Loss Prevention (DLP) secures sensitive data across Microsoft 365 services, such as Teams, SharePoint, OneDrive, and Exchange Online. This integration ensures that data at rest, in use, and in transit is continuously monitored and protected, reducing the risk of accidental or intentional data leakage.

Businesses benefit from centralised protection, as DLP extends its coverage to all critical touchpoints where sensitive data might be shared or accessed.

Whether employees are working on documents in Office 365 or collaborating via Teams, the system safeguards data seamlessly.

2. Advanced detection of sensitive data

Microsoft DLP uses robust data classification tools to identify sensitive information, such as financial data, credit card numbers, and personally identifiable information (PII). 

Through Microsoft Purview, businesses can configure policies to recognise specific data types, ensuring tailored protection.

For example, a financial institution can set up DLP policies to monitor and block unauthorised sharing of client account numbers, helping it comply with data protection regulations while maintaining client trust.

3. Improved compliance with regulations

With Microsoft DLP, businesses can implement policies to align with regulatory requirements like GDPR, HIPAA, and PCI-DSS. The platform offers ready-to-use templates that simplify the process of deploying policies for compliance.

This feature is especially useful for businesses in highly regulated industries, such as healthcare and finance, where compliance is critical. Adopting DLP ensures these businesses avoid hefty fines and maintain their reputation.

4. Enhanced visibility through DLP reports

Microsoft Data Loss Prevention generates detailed reports and alerts, allowing businesses to investigate data loss incidents effectively. Administrators can use the Microsoft Purview Compliance Portal to view activity logs, analyse policy matches, and understand trends in data handling.

These insights provide businesses with actionable data to refine their policies, mitigate future risks, and ensure the protection of sensitive data at all times.

5. Automated policy enforcement

Once DLP policies are configured, Microsoft automatically enforces them across the business. For example, if sensitive data such as credit card numbers is detected in an email, the system can block the email, notify the user, and generate an alert for administrators.

This automation reduces manual oversight while ensuring policies are consistently applied, saving time and increasing operational efficiency.

6. Customisable policies for different business needs

Microsoft allows businesses to create and deploy data loss prevention policies tailored to their unique requirements. Whether protecting financial data, intellectual property, or customer information, the system supports granular configurations.

For instance, a company can implement DLP policies that restrict file sharing to specific domains while allowing collaboration within the organisation, ensuring flexibility without compromising security.

7. Seamless integration with Microsoft Defender

Microsoft Data Loss Prevention integrates with Microsoft Defender for Cloud Apps and Microsoft Defender XDR, offering a unified security ecosystem. This integration enhances the organisation's overall security posture by combining data protection with threat detection and response capabilities.

By bridging the gap between data loss prevention and endpoint security, businesses can address a wide range of security challenges comprehensively.

How to implement DLP for your business

Setting up Microsoft Data Loss Prevention (DLP) is easier than you think. Follow these simple steps to ensure your business stays secure across Microsoft 365 services.

Step 1: Access the Microsoft Purview Compliance Portal

Begin by logging into the Microsoft Purview Compliance Portal, which serves as the central hub for configuring and managing DLP policies. Navigate to the Data Loss Prevention section to start creating policies.

This portal provides an intuitive interface for administrators to monitor DLP alerts, review reports, and make necessary adjustments to policies based on business needs.

Step 2: Identify sensitive data types

Use Microsoft Purview’s data classification tools to identify the types of sensitive data you need to protect. Microsoft offers predefined templates for commonly regulated data, such as financial and healthcare information, or you can create custom classifications.

For example, businesses handling credit card numbers or client financial details can use templates specifically designed for PCI-DSS compliance, ensuring targeted protection.

Step 3: Create a DLP policy configuration overview

Create DLP policies by defining rules that dictate how sensitive data is monitored and controlled. Set up conditions such as data types, actions to monitor, and protective measures like blocking, alerting, or notifying users.

For instance, a policy might block external sharing of documents labeled as "Confidential" while notifying the user of the violation and providing educational prompts to prevent repeat incidents.

Step 4: Test policies in audit mode

Before enforcing Microsoft Data Loss Prevention, test them in audit mode to evaluate their effectiveness. This step allows administrators to monitor policy matches and refine configurations without disrupting regular workflows.

Audit mode ensures that policies perform as intended, minimising the risk of false positives or unnecessary disruptions once they are activated.

Step 5: Deploy policies across Microsoft 365 services

Once policies are refined, they can be deployed across relevant Microsoft 365 services such as Teams, SharePoint, and Exchange Online. Ensure all endpoints and cloud applications are included in the policy scope to maximise coverage.

Microsoft DLP integrates seamlessly with services like Microsoft Defender for Cloud Apps, enhancing its ability to protect sensitive data in hybrid and remote work environments.

Step 6: Monitor and adjust policies

Use the Purview Compliance Portal to regularly monitor DLP alerts, investigate incidents, and analyse reports. This ongoing process ensures that policies remain effective and adapt to evolving business needs.

By continuously reviewing and refining policies, organisations can address emerging threats and maintain robust data protection strategies.

Why choose Clarity IT for your Microsoft 365 data loss prevention needs

When it comes to protecting your business’s sensitive data, partnering with an expert team can make all the difference. Clarity IT offers industry-leading IT services designed to help businesses implement and manage Microsoft Data Loss Prevention effectively.

With extensive experience in data security and compliance, Clarity IT ensures your DLP solution is configured to meet your unique business requirements.

Don’t wait for a data incident to happen. Let Clarity IT help you implement a DLP strategy that works.

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Frequently asked questions

What is Microsoft Data Loss Prevention, and how does it work?

Microsoft Data Loss Prevention (DLP) is a solution integrated within Microsoft 365 that helps businesses protect sensitive data across platforms like Office 365, Teams, and SharePoint.

DLP works by identifying sensitive data, applying policies to ensure secure handling, and preventing unauthorised sharing or data leaks. Using Microsoft Purview Data Loss Prevention, businesses can configure DLP policies to monitor data across Microsoft 365 services effectively.

How do DLP policies protect sensitive data within a business?

DLP policies are designed to safeguard sensitive business data by monitoring it in transit, at rest, and in use. These policies detect specific types of data, such as credit card numbers or financial data, and prevent unauthorised sharing or exposure.

Microsoft Purview Compliance Portal allows administrators to manage and implement DLP policy configurations and track DLP alerts to ensure compliance with data protection requirements. You can also use Microsoft Learn to build further security skills. 

What types of sensitive data can Microsoft DLP detect?

Microsoft DLP can identify and protect various types of sensitive data, including financial data, personal identification information, and intellectual property.

With data classification tools integrated into Microsoft Purview, businesses can customise DLP solutions to detect sensitive data across Microsoft 365 services and prevent data leakage.

How can I implement data loss prevention policies for Microsoft 365?

To implement data loss prevention policies, start by accessing the Microsoft Purview Compliance Portal. Use predefined templates or create custom DLP policies based on your organisation’s specific data protection strategy.

Configure rules to manage data leakage risks and ensure the secure use of sensitive data. Testing policies in audit mode helps refine configurations before deploying them across Microsoft 365 services.

What are the benefits of using Microsoft Purview Data Loss Prevention?

Microsoft Purview Data Loss Prevention provides robust features for protecting sensitive information, including customisable DLP policy configurations, real-time alerts, and detailed DLP reports.

It helps businesses comply with data security and compliance standards by identifying and protecting sensitive data within your company. The seamless integration with Microsoft Defender XDR further enhances overall data security.

How does Microsoft DLP address data security and compliance?

Microsoft DLP ensures data security and compliance by implementing policies to protect sensitive data across Microsoft 365 services such as Teams, SharePoint, and Exchange Online.

These policies are designed to align with regulatory standards like GDPR and HIPAA, reducing the risk of data leaks. The solution also generates detailed reports to investigate data loss incidents and adjust policies as needed.

Why should businesses use DLP to protect sensitive data in Office 365?

Using DLP in Office 365 ensures that sensitive data across Microsoft 365 services remains secure from unauthorised access and accidental leaks. To enhance data protection, Microsoft offers comprehensive tools like Microsoft Purview Information Protection and Microsoft Defender for Cloud Apps.

Businesses can manage data, comply with regulations, and protect their data at rest, in use, or during transfer.