Configure Passcode Policy (Apple Watch)
Create a Password Policy and apply it on the iOS device that the watch is synced to, the policy gets applied to the watch as well. The screen on the watch will prompt the user to set a passcode.
To create Passcode policy and deploy it to the enrolled apple watch, see the steps under Configure Passcode Policy Profile (iOS).
Once the profile is deployed to the device, the synced Apple Watch screen will prompt the user to set a passcode.