Can we adjust security baseline in Automanage from Azure VM?

you cannot modify or remove policies that are applied as auto manage but you can create a custom policy to override them as an example if you are windows computer, you can use group policies to override the setting or you can build a custom policy to create an exemption like an example "audit account lockout polices 

Create an exemption or custom policy to override or find the built-in policy "Audit Windows VMs that do not meet password and account lockout requirements" Modify the definition to exclude your VM.

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