The assumption deserves its audit, because what Microsoft handles is availability rather than your backup and the distinction writes the strategy.

Microsoft's actual coverage: infrastructure resilience so the service survives their failures, plus retention machinery around yours, recycle bins holding deletions for 93 days across their two stages, version history keeping prior file versions per library settings and a restore of last resort through support reaching back around 14 days for whole site collections, coarse and slow by design. What none of this covers: the malicious insider emptying recycle bins, the ransomware crypto pass through synced libraries, the deletion discovered on day 94 or the audit's actual question, data you control restorable on your schedule.

The real posture assembles in layers by what you can invest: the configuration layer first and free, retention policies in the compliance center holding content immutably past user deletion for your chosen years, version history limits raised on critical libraries and recycle bin awareness in the admin runbook, together closing the common accident cases. The export layer next, scheduled PnP PowerShell pulling critical libraries to storage you own, honest file level copies with the metadata limits scripting implies, sized to the libraries that would actually hurt. The product layer where scale or compliance demands it, third party SPO backup services doing scheduled full fidelity backup with granular restore, the category answer auditors recognize, chosen by restore granularity and where the backup data physically lives, questions worth asking vendors pointedly.

For the audit response specifically: retention policies deployed this week demonstrate immediate seriousness, the critical library export running by month end shows data in hand and the product evaluation with its restore testing documents the roadmap, the three paragraph answer that converts we assumed into a posture with dates.