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For complete information, see http://help.outlook.com/en-us/140/bb899685.aspx Also, see our list of videos for OWA.
Office 365 support for data encryption for at rest technologies is designed to minimize the risk of information leakage by encrypting the content, allowing access only by the intended users and by extending the protection beyond the initial publication location. Microsoft’s IRM goes further by restricting the actions allowed on the protected content and also encrypting Office application document attachments.
Office 365 mitigates against the risk of unauthorized physical access with extensive physical protections in their datacenters and operational procedures.