What can you specify using Microsoft 365 sensitivity labels?

The correct choice emphasizes the ability to specify which watermark to add to files using Microsoft 365 sensitivity labels. Sensitivity labels are a part of Microsoft's information protection strategy designed to help organizations classify and protect their data based on its sensitivity.

When applying sensitivity labels, administrators can define various protective measures that accompany the label, including the application of watermarks to documents. Watermarks are visual indicators that alert users to the sensitivity of the information contained in the file. For instance, a document labeled as confidential might have a watermark stating "CONFIDENTIAL," which serves to remind users of the need to handle the document with care.

This capability helps maintain compliance and ensures that sensitive information is appropriately safeguarded against unauthorized access or distribution, reinforcing the importance of data protection policies in the organization.

The other choices focus on aspects such as data retention and email management, which are not directly controlled or specified through sensitivity labels. Instead, those functionalities fall under different compliance and data governance tools within Microsoft 365.