Welcome to Defining a Sensitivity Label. When you define a sensitivity label, Microsoft recommends that you first establish a taxonomy for your labeling. You should then define what each label does. Lastly, you should define who sees the labels you’ve defined.

When you establish a labeling taxonomy, what you are doing is defining the different levels of sensitive content. 

The default labels that you see on your screen are sufficient for many organizations, but you can always use names or terms that are more specific to your organization.

If you opt to create custom labels, Microsoft recommends that you create tool tips that explain to your users what your labels do and which ones to use. Tool tips that you create will appear in Office apps whenever a user hovers over the different label options on the Office Ribbon in whatever app they are using.

The second part of using sensitivity labels is defining what your different labels do. This means that you need to configure the protection settings that you want to associate with each label that you create.

Using the default labels that I mentioned earlier, for example, you might set a header or footer for less-sensitive content via the “General” label, while more sensitive content tagged with the “Confidential” label might have encryption applied to it to ensure that only privileged users can access it.

And lastly, once you’ve established your taxonomy, and you’ve defined what each label does, you need to define who sees the labels you’ve created. To do this, you publish the labels in a label policy. Label policies are used to control which users and groups can see your labels. Because labels are reusable, you can define a single label and then include it in multiple label policies, which you can then assign to different users.

So, to quickly recap… To use labels, you should first establish a taxonomy. Once you’ve done that, you need to define what each label does. And lastly, you define who sees the labels.