There are two main standards for sending and receiving encrypted emails. One is PGP and the other is S/MIME.
As far as I am aware Outlook for Mac has built-in support for S/MIME as does Apple Mail. Neither has built-in support for PGP. There are two possible ways to add support for PGP, one is a free package called GPG Suite but this only supports Apple Mail, the other is a commercial product called PGP Desktop from Symantec. As far as I can tell PGP Desktop for Mac only supports Apple Mail and Gmail aka Google Mail.
Therefore we can assume you are trying to setup and use S/MIME in Outlook for Mac.
The way S/MIME works is that each person needs their own S/MIME email SSL certificate. Yes in theory you can create your own although I am dubious about how well Apple's Keychain Access tool does this.
Instead I strongly recommend getting an official S/MIME certificate. It is possible to get a free one which lasts for a year, you then need to get a new one when it expires again free of charge. The benefit of getting an official one is that it will be far more easily 'trusted' by other parties. The one I use I get here https://www.comodo.com/home/email-security/free-email-certificate.php
The S/MIME certificate is linked to your email address. Once you have your own S/MIME certificate installed in your Keychain you need to send a signed only email to the person you want to exchange emails with. They then need to reply with an email again signed only with their S/MIME certificate. Once you have exchanged signed only emails, you should then be able to send encrypted emails to/from that person.
I have not tried this with Outlook but the above is how it works with Apple Mail and is very easy and practically automatic. The only occasion it proved less easy was when we had to communicate with someone who was using a self-signed S/MIME certificate and we then had to manually add and trust their self-signed rootCA and intermediaryCA certificates.
