What is AWS IAM policy's primary function?

The primary function of an AWS IAM policy is to define permissions that dictate what actions users and services can perform on AWS resources. IAM (Identity and Access Management) policies are essentially JSON documents that specify which resources a principal (such as a user, group, or role) can access, and what actions they are allowed to perform on those resources.

For instance, you can create a policy that allows a specific user to read data from an Amazon S3 bucket, while preventing them from deleting any objects within that bucket. This precision in defining permissions helps ensure that access is given only to the necessary actions, thereby enhancing security and maintaining compliance with organizational policies.

The other options do not encapsulate the core purpose of IAM policies. Although managing user credentials securely is an important aspect of IAM, it is not the primary function of IAM policies themselves. Similarly, overseeing service performance metrics and facilitating business data integration pertain to different areas of AWS services and do not relate to the permission management that IAM policies provide. Thus, defining permissions is indeed the key role of AWS IAM policies.