The correct answer is Data classification because it is the primary mechanism used to determine the sensitivity and criticality of information involved in a security incident. According to the Security+ SY0-701 governance and risk management concepts, data classification assigns labels—such as public, internal, confidential, or restricted—to information based on its sensitivity, value to the organization, and potential impact if disclosed, altered, or destroyed. When a breach occurs, these classifications allow security teams and management to quickly assess how severe the incident is and what regulatory, legal, or business consequences may apply.

In this scenario, the compromised cloud-hosted solution contains customer information. By referencing the organization’s data classification scheme, incident responders can determine whether the exposed data includes personally identifiable information (PII), financial data, health records, or other regulated data types. This directly influences breach notification requirements, incident escalation, response prioritization, and communication with stakeholders. The SY0-701 study guide emphasizes that effective security governance depends on having clearly defined classification standards before an incident occurs, so decisions during response are consistent and defensible.

The other options do not meet the goal of determining sensitivity. Permission restrictions are access control mechanisms used to prevent unauthorized access, not to evaluate the importance of data after a compromise. Tabletop exercises are preparedness and training activities designed to test incident response plans, not to classify real data. Asset inventory identifies systems, hardware, software, and data locations, but it does not define how sensitive the data is; it only helps locate what may be affected.

Therefore, data classification is the most appropriate strategy for determining the sensitivity level of the breach, aligning directly with Security+ SY0-701 objectives related to risk management, privacy, and incident impact assessment.