Penetration Testing vs Bug Bounty

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Due to the recent spate of ransomware incidents, organizations and nervous IT administrators are wondering how to protect themselves from falling victim to such attacks. The fact is that relying on internal security testing alone is no longer sufficient in this modern era. If an oversight is made by an IT team during implementation, that same oversight will be made during internal testing because it’s the same individuals involved. 

This is why organizations are turning to penetration tests and bug bounties to improve their security. External expertise is what’s required to detect open vulnerabilities that get missed by internal processes and exploited by modern cybercriminals. With that, a question arises: bug bounties vs. penetration tests – which one is right for my organization?  

In this post, we’ll cover the differences between the two initiatives, analyze the associated costs and effort involved to help you decide which one (or both!) is best suited for your organization.

What are bug bounties?

In brief: bug bounties are a crowdsourced open-ended security audit. Basically, an organization says to the world: come try and hack us – if you do we’ll give you money! Independent security researchers then try to discover and report vulnerabilities before malicious actors are able to exploit them. If the researchers are successful, they’re typically awarded a cash payout corresponding to the severity of what they discovered.

That’s the gist of it. Bug bounty programs can be operated in-house or through a platform like HackerOne or Bugcrowd. An organization publicises the rules of engagement (which hopefully the community follows) and manages things from there.

What is a penetration test?

While bug bounties are essentially crowdsourced cybersecurity, penetration tests are a structured engagement with a team of industry experts. An organization works with a cybersecurity firm that specializes in security audits to perform the test. The two work together to define the scope and objectives of the engagement while collaborating throughout the process over an agreed-upon timeframe. At the end of the engagement, the client typically receives a report of the discovered vulnerabilities, recommended remediations, and the door is left open for future exchanges and security consulting.

If bug bounties are performed by cowboys, penetration tests are performed by the sheriffs and deputies whose badges take the form of industry-recognized certifications and practices. It’s less Wild West and more Johnny Law.

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Comparing the two: bug bounties vs. penetration tests

The following criteria help illustrate the key differences between bug bounty programs and penetration tests:

Category Bug Bounty Penetration Test
Scope

Posted ruleset created by the organization

Typically limited to publicly-accessible resources*

Agreed upon at the start of the engagement

Can include sensitive authenticated services

Can include internal infrastructure

Resources

In-house staff must manage the program and respond to submissions while it is active

Requires software to track submissions

Some overhead can be mitigated by using a bug bounty platform

Project management meetings throughout the engagement

Information gathering (ie. service documentation and network ranges) plus access configuration to provide testers 

Cost

Somewhat unpredictable

Bounties must be set high enough to attract interest

Large number of discoveries can lead to higher than expected payouts

Staffing costs to internally manage the program

Predictable and agreed upon during negotiation

It varies based on scope of work but can be as low as $5,000 – $7,000 for startups

Outputs Individual vulnerability reports for each discovery

Comprehensive report that includes vulnerabilities by severity, remediations, and additional recommendations

Meeting to discuss the findings

Attestation that can be provided to clients/insurance companies proving you have completed the process and addressed the vulnerabilities

*Private invite-only bounty programs do exist for more sensitive services

Making the decision

Choosing to do a penetration test

The structured nature and predictable costs of penetration testing can be attractive to organizations, especially those without dedicated IT security staff. Calling in the experts for a defined engagement with a specific timeline and set of deliverables is easy for management to grasp and produces tangible outputs such as reports and attestations. It also ensures that everything defined in the scope gets audited and sensitive services are handled with discretion – something that isn’t guaranteed with a bug bounty program. 

If an organization is able to say that they’ve completed a penetration test, fixed all the identified vulnerabilities, and has documentation to prove it – that can go a long way towards building client confidence and satisfying insurance providers and regulators.

Choosing to run a bug bounty program

For larger organizations with resources for a dedicated IT security team, bug bounties can make sense. Especially if the organization exists primarily in the tech space like Software as a Service (SaaS). By tapping into the collective knowledge of the global information security community, vulnerabilities can be safely identified and patched before they get exploited by a malicious actor. 

If you’re deciding to do a bug bounty program, be sure your organization is ready to dedicate the necessary resources for it. The program needs staff to run it, bounties that are high enough to attract attention, and a marketing initiative to promote it within the security community. Be prepared to sift through some low-quality submissions from researchers who didn’t read the rules or are trying to make a quick buck. Basically – it’s going to take some work, but can be well worth it in the end.

The good news: you can do both

Typically, it makes sense to start with a penetration test, and make a habit of doing one annually or before a new product launch. This guarantees that everything gets checked out (even the boring stuff) and that industry standards for security are being met. For organizations already engaging in penetration testing, the addition of a bug bounty program can further improve their security posture between tests.

Conclusion

As IT infrastructure ages and grows more complex, the techniques cybercriminals use to extort their victims are becoming increasingly sophisticated. At a minimum, a proper defense against these threats includes penetration testing from an expert firm. For organizations that want to go above and beyond, bug bounties are an additional security initiative to help stay ahead of hackers. This is a battle that gets fought on multiple fronts.

A penetration test is a simulated hacking attempt that identifies opportunities for real hackers to break through your defences and perform various malicious acts. It generally leverages tools used by hackers and various professional methodologies to replicate the steps that modern hackers would take to intrude into your IT systems.


A pentest attempts to exploit your vulnerabilities to determine their potential impact, should they be used in a real hacking scenario. They provide a list of vulnerabilities with their respective level of severity, as well as technical recommendations to help your team apply corrective measures and focus on the most critical vulnerabilities.


These services allow your organization to answer the following questions, among several others:

  • Can a hacker gain access to any sensitive information?
  • Can a hacker hijack my technologies for any malicious acts?
  • Could a malware infection spread through the network?
  • Can an attacker escalate access to an administrative user?

Learn more about penetration testing →

There are many contexts in which a penetration test should be performed.

Here are some common use cases for a pentest:

  • As part of the development cycle of an application. (To test the security of a new feature/app)
  • To comply with security requirements. (3rd-parties, PCI, ISO27001, etc.)
  • To secure sensitive data from exfiltration.
  • To prevent infections by malware. (Ransomware, spyware, etc.)
  • To prevent disruptive cyberattacks. (Such as denial of service)
  • As part of a cybersecurity risk management strategy.

All businesses are advised to conduct a penetration test at least once a year, as well as after any significant upgrades or modifications to the company network. Given the rapid rate at which new exploits are discovered, we generally recommend that quarterly tests are performed.

Various steps are taken over the course of the project to prevent the potential impact of our tests on the stability of your technological environment and the continuity of your business operations.

For this reason, a communication plan will be put in place at the beginning of the project to prevent and mitigate any potential impact. A representative of your organization will be identified to act as the main point of contact to ensure rapid communication in the event of a situation directly impacting the conduct of your daily operations, or if any critical vulnerabilities are identified, for which  corrective measures need to be implemented quickly.

While we use a simple 4 levels risk rating approach (Critical, High, Moderate, Low), our risk assessment is actually based on the Common Vulnerability Scoring System (CVSS) standard. Two main criteria are considered when  assessing the risk level of each vulnerability:

  • Potential impact: The potential impact of an attack based on a vulnerability, combined with its  potential effect on the availability of the system, as well as the confidentiality and integrity of  the data.
  • Exploitability: The potential exploitability of a vulnerability; a vulnerability that is easier to  exploit increases the number of potential attackers and thus the likelihood of an attack.  Different factors are considered when evaluating the exploitability potential of a vulnerability  (e.g.: access vector, authentication, operational complexity, etc.)

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