Hi Arun,
Resizing a VM essentially means shutting it down (deallocating) and then starting it up with different specifications (CPU, RAM, networking, etc.). Often it will be redeployed to a different physical host.
Separate from resizing considerations, you should have a current backup of your VM if you care about its data and should periodically perform a test restore to make sure the backup/restore works.
Does Azure automatically handle the resizing process to ensure data integrity and recovery, or are there additional precautions required?
A: Azure handles the resizing process (deallocating, changing specs, redeploying, etc.) as I described above. In terms of "data integrity and recovery", it isn't doing anything special. In general shutting down and restarting/redeploying a VM doesn't cause data loss, assuming there aren't workloads running in the VM that don't handle shutdown properly.
As mentioned above, you should have a current backup regardless of whether or not you resize your VM. As an extra "backup" you could do a snapshot of the VM's disk(s) before resizing. Better to do snapshot while VM is stopped.
What are the common risks or failure scenarios associated with VM resizing that should be considered?
A: Most of the time I have not experienced issues when resizing VMs. The times when I did have a problem the resize failed due to the new size being temporarily unavailable due to capacity. Usually I was able to succeed after retrying or I had to pick a different size and then retry to get the size I wanted later.
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-TP