What is Azure Policy?

Governance validates that your organization can achieve its goals through effective and efficient use of IT. It meets this need by creating clarity between 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 strategic need 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 meets this need by evaluating your resources for non-compliance with assigned policies. All data stored by Azure Policy is encrypted at rest.

For example, you can have a policy to allow only a certain SKU size of virtual machines in your environment. Once this policy is implemented, new and existing resources are evaluated for compliance. With the right type of policy, existing resources can be brought into compliance. Later in this documentation, we'll 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.


This service supports Azure delegated resource management, which lets service providers sign in to their own tenant to manage subscriptions and resource groups that customers have delegated. For more info, see Azure Lighthouse.

How is it different from RBAC?

There are a few key differences between Azure Policy and role-based access control (RBAC). RBAC focuses on user actions at different scopes. You might be added to the contributor role for a resource group, allowing you to make changes to that resource group. Azure Policy focuses on resource properties during deployment and for already existing resources. Azure Policy controls properties such as the types or locations of resources. Unlike RBAC, Azure Policy is a default allow and explicit deny system.

RBAC Permissions in Azure Policy

Azure Policy has several permissions, known as operations, in two Resource Providers:

Many Built-in roles grant permission to Azure Policy resources. The Resource Policy Contributor role includes most Azure Policy operations. Owner has full rights. Both Contributor and Reader can use all read Azure Policy operations, but Contributor can also trigger remediation.

If none of the Built-in roles have the permissions required, 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's enforced. And, it has a defined effect that takes place if the conditions are met.

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

  • Allowed Storage Account SKUs: Determines if a storage account being deployed is within a set of SKU sizes. Its effect is to deny all storage accounts that don't adhere to the set of defined SKU sizes.
  • Allowed Resource Type: Defines the resource types that you can deploy. Its effect is to deny all resources that aren't part of this defined list.
  • Allowed Locations: Restricts the available locations for new resources. Its effect is used to enforce your geo-compliance requirements.
  • Allowed Virtual Machine SKUs: Specifies a set of virtual machine SKUs that you can deploy.
  • Add a tag to resources: Applies a required tag and its default value if it's not specified by the deploy request.
  • Enforce tag and its value: Enforces a required tag and its value to a resource.
  • Not allowed resource types: Prevents a list of resource types from being deployed.

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

Policy evaluation happens with several different actions, such as policy assignment or policy updates. For a complete list, see Policy evaluation triggers.

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 an individual resource. The term scope refers to all the resources, resource groups, subscriptions, or management groups that the policy definition is assigned to. Policy assignments are inherited by all child resources. This design means that a policy applied to a resource group is also applied to 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. You could exclude a resource group in that subscription that is intended for networking infrastructure. You then 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 allow list 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. 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 when creating a policy definition. When a parameter is defined, it's 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 Definition structure - 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.


The SDK, such as Azure CLI and Azure PowerShell, use properties and parameters named PolicySet to refer to initiatives.

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 don't 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 an individual resource.

Each initiative is assignable to different scopes. One initiative can be assigned to both subscriptionA and subscriptionB.

Initiative parameters

Like policy parameters, initiative parameters help simplify initiative management by reducing redundancy. Initiative parameters are 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.

When creating value options in an initiative definition, you're unable to input a different value during the initiative assignment because it's not part of the list.

Maximum count of Azure Policy objects

There's 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 500
Scope Initiative definitions 100
Tenant Initiative definitions 1,000
Scope Policy or initiative assignments 100
Policy definition Parameters 20
Initiative definition Policies 100
Initiative definition Parameters 100
Policy or initiative assignments Exclusions (notScopes) 400
Policy rule Nested conditionals 512
Remediation task Resources 1000

Recommendations for managing policies

Here are a few pointers and tips to keep in mind:

  • Start with an audit effect instead of a deny effect to track impact of your policy definition on the resources in your environment. If you have scripts already in place to autoscale your applications, setting a deny effect may hinder such automation tasks already in place.

  • Consider organizational hierarchies when creating definitions and assignments. We recommend creating definitions at higher levels such as the management group or subscription level. Then, create the assignment at the next child level. If you create a definition at a management group, the assignment can be scoped down to a subscription or resource group within that management group.

  • We recommend creating and assigning initiative definitions even for a single policy definition. For example, you have policy definition policyDefA and create it under initiative definition initiativeDefC. If you create another policy definition later for policyDefB with goals similar to policyDefA, you can add it under initiativeDefC and track them together.

  • Once you've created an initiative assignment, policy definitions added to the initiative also become part of that initiatives assignments.

  • When an initiative assignment is evaluated, all policies within the initiative are also evaluated. If you need to evaluate a policy individually, it's 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, 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: