What is Azure Policy?

IT Governance ensures that your organization is able to achieve its goals through an effective and efficient use of IT. It does this by creating clarity between your business goals and IT projects.

Does your company experience a significant number of IT issues that never seem to get resolved? Good IT governance involves planning your initiatives and setting priorities on a strategic level to help manage and prevent issues. This is where Azure Policy comes in.

Azure Policy is a service in Azure that you use to create, assign and, manage policies. These policies enforce different rules and effects over your resources, so those resources stay compliant with your corporate standards and service level agreements. Azure Policy does this by running evaluations of your resources and scanning for those not compliant with the policies you have created. For example, you can have a policy to allow only a certain SKU size of virtual machines in your environment. Once this policy has been implemented, it will then be evaluated when creating and updating resources, as well as over your already existing resources. Later on in this documentation, we will go over more details on how to create and implement policies with Azure policy.


Azure Policy's compliance evaluation is now provided for all assignments regardless of pricing tier. If your assignments do not show the compliance data, please ensure that the subscription is registered with the Microsoft.PolicyInsights resource provider.

How is it different from RBAC?

There are a few key differences between policy and role-based access control (RBAC). RBAC focuses on user actions at different scopes. For example, you might be added to the contributor role for a resource group at the desired scope. The role allows you to make changes to that resource group. Policy focuses on resource properties during deployment and for already existing resources. For example, through policies, you can control the types of resources that can be provisioned. Or, you can restrict the locations in which the resources can be provisioned. Unlike RBAC, policy is a default allow and explicit deny system.

RBAC Permissions in Azure Policy

Azure Policy has permissions represented as operations in two different Resource Providers:

Several of the Built-in roles have various levels of permission to Azure Policy resources, such as Security Admin that can manage policy assignments and definitions but cannot view compliance information and Reader that can read details regarding policy assignments and definitions, but cannot make changes or view compliance information. While Owner has full rights, Contributor does not have any Azure Policy permissions. To grant permission to view Policy compliance details, create a custom role.

Policy definition

The journey of creating and implementing a policy in Azure Policy begins with creating a policy definition. Every policy definition has conditions under which it is enforced. And, it has an accompanying effect that takes place if the conditions are met.

In Azure Policy, we offer some built-in policies that are available to you by default. For example:

  • Require SQL Server 12.0: This policy definition has conditions/rules to ensure that all SQL servers use version 12.0. Its effect is to deny all servers that do not meet these criteria.
  • Allowed Storage Account SKUs: This policy definition has a set of conditions/rules that determine if a storage account that is being deployed is within a set of SKU sizes. Its effect is to deny all storage accounts that do not adhere to the set of defined SKU sizes.
  • Allowed Resource Type: This policy definition has a set of conditions/rules to specify the resource types that your organization can deploy. Its effect is to deny all resources that are not part of this defined list.
  • Allowed Locations: This policy enables you to restrict the locations that your organization can specify when deploying resources. Its effect is used to enforce your geo-compliance requirements.
  • Allowed Virtual Machine SKUs: This policy enables you to specify a set of virtual machine SKUs that your organization can deploy.
  • Apply tag and its default value: This policy applies a required tag and its default value, if it is not specified by the user.
  • Enforce tag and its value: This policy enforces a required tag and its value to a resource.
  • Not allowed resource types: This policy enables you to specify the resource types that your organization cannot deploy.

In order to implement these policy definitions (both built-in and custom definitions), you will need to assign them. You can assign any of these policies through the Azure portal, PowerShell, or Azure CLI.

Keep in mind that a policy re-evaluation happens about once an hour, which means that if you make changes to your policy definition after implementing the policy (creating a policy assignment) it will be re-evaluated over your resources within the hour.

To learn more about the structures of policy definitions, review Policy Definition Structure.

Policy assignment

A policy assignment is a policy definition that has been assigned to take place within a specific scope. This scope could range from a management group to a resource group. The term scope refers to all the resource groups, subscriptions, or management groups that the policy definition is assigned to. Policy assignments are inherited by all child resources. This means that if a policy is applied to a resource group, it is applied to all the resources in that resource group. However, you can exclude a subscope from the policy assignment.

For example, at the subscription scope, you can assign a policy that prevents the creation of networking resources. However, you exclude one resource group within the subscription that is intended for networking infrastructure. You grant access to this networking resource group to users that you trust with creating networking resources.

In another example, you might want to assign a resource type whitelist policy at the management group level. And then assign a more permissive policy (allowing more resource types) on a child management group or even directly on subscriptions. However, this example wouldn't work because policy is an explicit deny system. Instead, you need to exclude the child management group or subscription from the management group-level policy assignment. Then, assign the more permissive policy on the child management group or subscription level. To summarize, if any policy results in a resource getting denied, then the only way to allow the resource is to modify the denying policy.

For more information on setting policy definitions and assignments through the portal, see Create a policy assignment to identify non-compliant resources in your Azure environment. Steps for PowerShell and Azure CLI are also available.

Policy parameters

Policy parameters help simplify your policy management by reducing the number of policy definitions you must create. You can define parameters when creating a policy definition to make it more generic. Then you can reuse that policy definition for different scenarios. You do so by passing in different values when assigning the policy definition. For example, specifying one set of locations for a subscription.

Parameters are defined/created when creating a policy definition. When a parameter is defined, it is given a name and optionally given a value. For example, you could define a parameter for a policy titled location. Then you can give it different values such as EastUS or WestUS when assigning a policy.

For more information about policy parameters, see Resource Policy Overview - Parameters.

Initiative definition

An initiative definition is a collection of policy definitions that are tailored towards achieving a singular overarching goal. Initiative definitions simplify managing and assigning policy definitions. They simplify by grouping a set of policies as one single item. For example, you could create an initiative titled Enable Monitoring in Azure Security Center, with a goal to monitor all the available security recommendations in your Azure Security Center.

Under this initiative, you would have policy definitions such as:

  • Monitor unencrypted SQL Database in Security Center – For monitoring unencrypted SQL databases and servers.
  • Monitor OS vulnerabilities in Security Center – For monitoring servers that do not satisfy the configured baseline.
  • Monitor missing Endpoint Protection in Security Center – For monitoring servers without an installed endpoint protection agent.

Initiative assignment

Like a policy assignment, an initiative assignment is an initiative definition assigned to a specific scope. Initiative assignments reduce the need to make several initiative definitions for each scope. This scope could also range from a management group to a resource group.

From the preceding example, the Enable Monitoring in Azure Security Center initiative can be assigned to different scopes. For example, one assignment can be assigned to subscriptionA. Another can be assigned to subscriptionB.

Initiative parameters

Like policy parameters, initiative parameters help simplify initiative management by reducing redundancy. Initiative parameters are essentially the list of parameters being used by the policy definitions within the initiative.

For example, take a scenario where you have an initiative definition - initiativeC, with policy definitions policyA and policyB each expecting a different type of parameter:

Policy Name of parameter Type of parameter Note
policyA allowedLocations array This parameter expects a list of strings for a value since the parameter type has been defined as an array
policyB allowedSingleLocation string This parameter expects one word for a value since the parameter type has been defined as a string

In this scenario, when defining the initiative parameters for initiativeC, you have three options:

  • Use the parameters of the policy definitions within this initiative: In this example, allowedLocations and allowedSingleLocation become initiative parameters for initiativeC.
  • Provide values to the parameters of the policy definitions within this initiative definition. In this example, you can provide a list of locations to policyA’s parameter – allowedLocations and policyB’s parameter – allowedSingleLocation. You can also provide values when assigning this initiative.
  • Provide a list of value options that can be used when assigning this initiative. When you assign this initiative, the inherited parameters from the policy definitions within the initiative, can only have values from this provided list.

For example, you might create a list of value options in an initiative definition that contain EastUS, WestUS, CentralUS, and WestEurope. If so, you are unable to input a different value such as Southeast Asia during the initiative assignment, because it is not part of the list.

Maximum count of Policy objects

There is a maximum count for each object type for Azure Policy. An entry of Scope means either the subscription or the management group.

Where What Maximum count
Scope Policy Definitions 250
Scope Initiative Definitions 100
Tenant Initiative Definitions 1000
Scope Policy/Initiative Assignments 100
Policy Definition Parameters 20
Initiative Definition Policies 100
Initiative Definition Parameters 100
Policy/Initiative Assignments Exclusions (notScopes) 100
Policy Rule Nested Conditionals 512

Recommendations for managing policies

While creating and managing policy definitions and assignments, here are a few pointers we advise you to follow and tips to keep in mind:

  • If you are creating policy definitions in your environment, we recommend starting with an audit effect, as opposed to a deny effect, to keep track of the impact of your policy definition on the resources in your environment. If you have scripts already in place to autoscale up your applications, setting a deny effect may hinder those automations tasks you already have in place.
  • It is important to keep organizational hierarchies in mind when creating definitions and assignments. We recommend creating definitions at a higher level, for example at the management group or subscription level, and assigning at the next child level. For example, if you create a policy definition at the management group level, a policy assignment of that definition can be scoped down to a subscription level within that management group.
  • We recommend always using initiative definitions instead of policy definitions, even if you only have one policy in mind. For example, if you have a policy definition – policyDefA and you create it under the initiative definition - initiativeDefC, if you decide to create another policy definition later for policyDefB with goals similar to that of policyDefA, you can add it under initiativeDefC and track them better that way.
  • Keep in mind that once you have created an initiative assignment from an initiative definition, any new policy definitions added to the initiative definition automatically roll under the initiative assignment(s) under that initiative definition.
  • Once an initiative assignment is triggered, all policies within the initiative will be triggered as well. However, if you needed to execute a policy individually, it is better to not include it in an initiative.

Video Overview

The following overview of Azure Policy is from Build 2018. For slides or video download, please visit Govern your Azure environment through Azure Policy on Channel 9.

Next steps

Now that you have an overview of Azure Policy and some of the key concepts, here are the suggested next steps: