Hands-on Lab — AZ-500 Microsoft Azure Security Engineer Associate

Overview

Prerequisites

Steps

1. 1.Provider, Resource Group, naming

   Standard Azure opener.

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   terraform {
     required_version = ">= 1.5"
   
     required_providers {
       azurerm = { source = "hashicorp/azurerm", version = "~> 4.0" }
       random  = { source = "hashicorp/random",  version = "~> 3.6" }
     }
   }
   
   provider "azurerm" {
     features {
       key_vault {
         purge_soft_delete_on_destroy = true
       }
     }
   }
   
   resource "random_id" "suffix" {
     byte_length = 3
   }
   
   data "azurerm_client_config" "current" {}
   data "azurerm_subscription" "current" {}
   
   locals {
     tags = {
       Project   = "certlabpro-az-500"
       ManagedBy = "terraform"
     }
   }
   
   resource "azurerm_resource_group" "main" {
     name     = "certlabpro-az-500-rg"
     location = "eastus"
     tags     = local.tags
   }

2. 2.Build a Key Vault with a customer-managed encryption key

   Provisions:

   • Azure Key Vault

   Customer-managed keys (CMK) are the AZ-500 Data Security primitive: you provide and rotate the encryption key, Azure storage/SQL/etc. uses it for envelope encryption. Compare to Microsoft-managed keys (MMK) — easier but Microsoft holds the key.

   We create a Key Vault with RBAC authorization, then create a 2048-bit RSA key inside it. The Storage Account in Step 3 will reference this key for at-rest encryption. AZ-500's Implement platform protection and Manage security operations domains both lean on this CMK pattern as the encryption-at-rest answer when the question mentions "organization controls keys".

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   resource "azurerm_key_vault" "main" {
     name                       = "kv-az500-${random_id.suffix.hex}"
     resource_group_name        = azurerm_resource_group.main.name
     location                   = azurerm_resource_group.main.location
     tenant_id                  = data.azurerm_client_config.current.tenant_id
     sku_name                   = "standard"
     enable_rbac_authorization  = true
     soft_delete_retention_days = 7
     purge_protection_enabled   = false # set true in production
   
     tags = local.tags
   }
   
   resource "azurerm_role_assignment" "kv_admin_self" {
     scope                = azurerm_key_vault.main.id
     role_definition_name = "Key Vault Administrator"
     principal_id         = data.azurerm_client_config.current.object_id
   }
   
   resource "azurerm_key_vault_key" "cmk" {
     name         = "storage-cmk"
     key_vault_id = azurerm_key_vault.main.id
     key_type     = "RSA"
     key_size     = 2048
     key_opts     = ["unwrapKey", "wrapKey"]
   
     depends_on = [azurerm_role_assignment.kv_admin_self]
   
     rotation_policy {
       automatic {
         time_before_expiry = "P30D"
       }
       expire_after         = "P365D"
       notify_before_expiry = "P30D"
     }
   }

3. 3.Create a CMK-encrypted Storage Account

   Provisions:

   • Azure Storage

   Storage accounts using customer-managed keys need a user-assigned identity to read the key from Key Vault. We create that identity, grant it Key Vault Crypto Service Encryption User on the Key Vault, then bind it to the storage account via the customer_managed_key block.

   The key_versionless mode (using customer_managed_key.key_vault_key_id = key_vault_key.cmk.versionless_id) is the AZ-500 best-practice answer for automatic key-rotation: when the key rotates, storage automatically picks up the new version without manual reconfiguration.

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   resource "azurerm_user_assigned_identity" "storage_cmk" {
     name                = "uami-az500-storage"
     resource_group_name = azurerm_resource_group.main.name
     location            = azurerm_resource_group.main.location
   
     tags = local.tags
   }
   
   resource "azurerm_role_assignment" "storage_kv_user" {
     scope                = azurerm_key_vault.main.id
     role_definition_name = "Key Vault Crypto Service Encryption User"
     principal_id         = azurerm_user_assigned_identity.storage_cmk.principal_id
   }
   
   resource "azurerm_storage_account" "data" {
     name                            = "az500data${random_id.suffix.hex}"
     resource_group_name             = azurerm_resource_group.main.name
     location                        = azurerm_resource_group.main.location
     account_tier                    = "Standard"
     account_replication_type        = "LRS"
     account_kind                    = "StorageV2"
   
     https_traffic_only_enabled      = true
     min_tls_version                 = "TLS1_2"
     allow_nested_items_to_be_public = false
   
     identity {
       type         = "UserAssigned"
       identity_ids = [azurerm_user_assigned_identity.storage_cmk.id]
     }
   
     customer_managed_key {
       key_vault_key_id          = azurerm_key_vault_key.cmk.versionless_id
       user_assigned_identity_id = azurerm_user_assigned_identity.storage_cmk.id
     }
   
     tags = local.tags
   
     depends_on = [azurerm_role_assignment.storage_kv_user]
   }

4. 4.Set up NSG flow logs into a Log Analytics workspace

   Provisions:

   • Azure Network Watcher
   • Azure Monitor

   NSG flow logs are the AZ-500 Manage security operations primitive for network-traffic visibility — they record every flow accepted or denied by an NSG rule (5-tuple + bytes + packets + result), persisted to a storage account and queryable via Traffic Analytics on Log Analytics.

   We provision the NSG, a Network Watcher (the regional Azure-managed service that owns the flow-log endpoint), and a flow log resource with Traffic Analytics enabled. The flow logs land in a storage account (separate from our data storage) and are processed into Log Analytics for KQL queries.

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   resource "azurerm_network_security_group" "main" {
     name                = "nsg-az500"
     resource_group_name = azurerm_resource_group.main.name
     location            = azurerm_resource_group.main.location
   
     tags = local.tags
   }
   
   resource "azurerm_network_watcher" "main" {
     name                = "nw-az500"
     resource_group_name = azurerm_resource_group.main.name
     location            = azurerm_resource_group.main.location
   
     tags = local.tags
   }
   
   resource "azurerm_storage_account" "flow_logs" {
     name                            = "az500flow${random_id.suffix.hex}"
     resource_group_name             = azurerm_resource_group.main.name
     location                        = azurerm_resource_group.main.location
     account_tier                    = "Standard"
     account_replication_type        = "LRS"
     account_kind                    = "StorageV2"
   
     https_traffic_only_enabled      = true
     min_tls_version                 = "TLS1_2"
     allow_nested_items_to_be_public = false
   
     tags = local.tags
   }
   
   resource "azurerm_log_analytics_workspace" "main" {
     name                = "log-az500"
     resource_group_name = azurerm_resource_group.main.name
     location            = azurerm_resource_group.main.location
     sku                 = "PerGB2018"
     retention_in_days   = 30
   
     tags = local.tags
   }
   
   resource "azurerm_network_watcher_flow_log" "main" {
     name                 = "nsg-az500-flow"
     network_watcher_name = azurerm_network_watcher.main.name
     resource_group_name  = azurerm_resource_group.main.name
     target_resource_id   = azurerm_network_security_group.main.id
     storage_account_id   = azurerm_storage_account.flow_logs.id
     enabled              = true
     version              = 2
   
     retention_policy {
       enabled = true
       days    = 30
     }
   
     traffic_analytics {
       enabled               = true
       workspace_id          = azurerm_log_analytics_workspace.main.workspace_id
       workspace_region      = azurerm_log_analytics_workspace.main.location
       workspace_resource_id = azurerm_log_analytics_workspace.main.id
       interval_in_minutes   = 10
     }
   }

5. 5.Enable Microsoft Defender for Cloud Foundational CSPM at subscription scope

   Provisions:

   • Microsoft Defender for Cloud

   Defender for Cloud is Azure's CSPM (Cloud Security Posture Management) and CWP (Cloud Workload Protection) service. The Foundational CSPM tier is free and includes the Microsoft Cloud Security Benchmark assessment — Azure's port of CIS / NIST controls into automated checks. AZ-500's Manage security operations domain tests this baseline as the day-one security visibility primitive.

   We enable the foundational subscription-scope pricing plan (free) and a auto_provisioning_setting that hooks the Log Analytics agent on new VMs automatically — meaning new compute in this subscription gets observability without manual install. Paid Defender plans (Defender for Servers, Defender for Storage, Defender for SQL, etc.) each enable per-resource-type detection; we leave them off here for cost but mention them as the follow-up question.

   With this final piece in place, the AZ-500 baseline is shaped: CMK encryption at rest, network-flow visibility, posture management. Every additional AZ-500 pattern (Sentinel, Conditional Access, Private Endpoints, Azure Firewall) attaches to this base.

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   resource "azurerm_security_center_subscription_pricing" "cspm" {
     tier          = "Free" # Foundational CSPM
     resource_type = "CloudPosture"
   }
   
   # Optional uncomment to enable paid Defender plans (each charges per resource).
   # resource "azurerm_security_center_subscription_pricing" "servers" {
   #   tier          = "Standard"
   #   resource_type = "VirtualMachines"
   #   subplan       = "P2"
   # }

Cleanup