Bug bounty programs: 5 Questions, 5 Answers

Traditional security measures alone are becoming increasingly inadequate for ensuring robust protection against cyberattacks. Three of the four most frequently exploited weak points in 2024 were so-called zero-day vulnerabilities – previously unknown security flaws that enabled targeted attacks.  Companies should therefore also consider unconventional approaches such as bug bounty programs. Together with Kevin Euler, Associated Partner for cybersecurity at MHP, we focus on what really matters and reveal how organizations can benefit from such programs.

1. What is a bug bounty program?

Organizations use bug bounty programs to give highly qualified IT security specialists – often referred to as ethical hackers – attractive incentives within defined parameters to look for vulnerabilities in their digital services and systems. The discovery and reporting of security flaws (bugs) are compensated with a reward (bounty). This usually takes the form of a financial reward based on defined criteria.

The aim of such programs is to find security flaws that have not yet been discovered by code reviews, automated scans, and traditional penetration testing – before they are exploited by an attacker. To this end, a large and diverse community of highly experienced ethical hackers is approached in order to benefit from different approaches and broad technical expertise in the search for hidden security flaws.

For these initiatives, organizations mainly use relevant platforms such as HackerOne or Bugcrowd, but can also establish their own solutions for their programs.

2. Why should companies and organizations get involved in bug bounty programs – and how do they benefit from them?

In 2024 alone, the damage caused by industrial espionage, data theft, and IT sabotage in Germany ran to more than 265 billion euros – reaching a new record.  Organizations therefore have a vital interest in protecting themselves from cyberattacks.

However, these security mechanisms are often not fully capable of detecting complex or well-hidden security flaws in particular and preventing them from being exploited. This is where a bug bounty program comes in, supplementing existing security measures and providing an easily accessible approach. Organizations benefit from this in several ways:

• Independent review by the crowd:
  The collective intelligence of a global community of security researchers who act independently of other security measures represents an additional external level of review – separate from all other methods. This additional form of security check often also reveals errors that have previously gone unnoticed or were not part of the scope of other reviews. That is especially the case when organizations use lucrative rewards to encourage many community members to take part in the search.
   
• Continuous improvements:
  Bug bounty programs usually run on a long-term basis, ensuring that the digital services and systems that fall within the scope of the program are constantly monitored. The continuous flow of feedback creates an early warning system to improve the organization’s security measures in good time. The type and frequency of the reported (potential) vulnerabilities can also be used to draw valuable conclusions for improving upstream security controls such as security requirements management, dynamic application security testing (DAST) / static application security testing (SAST), or vulnerability scanning.
   
• Performance-based costs and workload eased for internal IT:
  Since organizations involved in bug bounty programs only pay for submitted reports that actually constitute a security vulnerability in addition to the cost of running the program, they often represent a cost-efficient option compared to penetration testing, for example. In addition, they reduce the workload of in-house IT teams, a factor that should not be overlooked, especially in view of the low availability of qualified IT security experts. When running the program, it can be a good idea to engage an experienced security service provider in order to take advantage of any synergy effects and reduce complexity.
   
• High flexibility:
  By freely setting the parameters, organizations can decide for themselves how to use a bug bounty program as a targeted additional security measure in their cybersecurity strategy. They can determine the extent to which it is used, for example, as well as specify the focus areas and define the priorities. Parameters such as scope, categorization of vulnerabilities, time period, and the reward amounts can be continuously and dynamically adapted to operational requirements over the course of the program.

3. How do bug bounty programs differ from other security practices

Many of the common cybersecurity practices are highly standardized, based on established models and drawing on existing technological possibilities. Security checks such as penetration tests (pentests) also have a very clearly defined technical scope and time frame. Pentests are usually conducted solely at predefined time intervals – once a year, for example. Bug bounty initiatives are different: They differ from the usual practices in five key ways:

• Swarm intelligence: 
  Bug bounty programs do not rely on any single person or individual service provider, but on the expertise of a global community of security researchers.
   
• Continuity: 
  Bug bounty programs run on a long-term basis and make continuous review possible without interruption.
   
• Range of perspectives: 
  By involving many different security researchers, bug bounty initiatives provide a wide range of perspectives and creative approaches – making the “attacks” unpredictable for organizations and enabling realistic simulation of cyberattacks. Unlike a red team assessment, the organization is also unaware of the nature and timing of an “attack.”
   
• Performance-based costs: 
  Bug bounty programs have a performance-based pay structure and are therefore generally cost-efficient. That’s because the reward amount is often based on the potential risk of damage caused by the identified vulnerability.
   
• Vulnerabilities retested: 
  For financial reasons, organizations often do not retest security gaps once they have been closed. Bug bounty programs, meanwhile, run continuously and increase the chance of (re)discovering improperly closed gaps or identifying subsequent errors.

4. How complex and time-consuming is it for a large or medium-sized company to establish a bug bounty program?

Bug bounty programs essentially represent greater value for those organizations whose cybersecurity has already reached a certain level of maturity – in other words, when solid security foundations have already been laid. However, the programs can also be worthwhile for organizations with a lower level of maturity if they are used in a targeted manner, all relevant aspects for successful establishment of the program are taken into account, and the technical scope is properly defined.

There is initially a certain amount of work involved in establishing the program – to define the scope and obtain approvals, for example, as well as define processes and assign new responsibilities. Legal issues must also be considered when establishing bug bounty programs, and the necessary approvals must be obtained – from third-party providers, for example, if they are responsible for operating a system that is to be tested.

Once a company has finished setting up the program, there are then the licensing fees for the bug bounty platform used, costs in the form of bounties to reward successful community members, and expenses associated with evaluating the submitted reports. The latter can be reduced to a reasonable level by outsourcing the task to a dedicated and experienced service provider. However, companies can easily manage their reward costs by choosing the right tender process on the bug bounty platform. They have two options to choose from: 

• Public programs:
  With public programs, an organization invites the entire community on the platform to look for potential security flaws in its digital services and systems, increasing the chance of detecting even well-hidden vulnerabilities. However, if the organization receives a lot of responses at the same time, it can quickly become overwhelmed by the amount of incoming information. This is especially the case if it only has limited internal resources to review and evaluate the responses and take the necessary action.
   
• Private programs:
  Alternatively, companies can also run private programs – and invite only a few selected ethical hackers to look for vulnerabilities in their system. To this end, many platforms offer features that companies can use to identify and contact reliable security experts.

Regardless of the type of tender, the scope of a bug bounty program can also be (initially) limited to specific assets or domains. This limited approach is particularly suitable if a company is gaining initial experience with such a program and wants to keep the workload and costs to a minimum. Depending on the results and as soon as a routine process has been established, the scope can then be gradually widened at any time.

Besides ethical hackers, bug bounty programs can also be used to integrate AI services, which take on the task of searching for security flaws. This may be of particular interest to companies with a lower level of security maturity, enabling them to search for vulnerabilities across their systems in a cost-effective manner without the additional workload.

5. What are the critical success factors involved in extracting added value from a bug bounty program? 

Measuring the added value of security measures is a notoriously difficult task. However, effective bug bounty initiatives are characterized by a few critical success factors. These particularly include:

• Embedding the program in the overall cybersecurity strategy:
  Bug bounty programs are no substitute for classic security measures such as penetration testing. They serve to complement such measures – and play a key role, especially in the late phases of the life cycle of a digital service or system. Organizations should therefore initially focus on establishing solid foundations and only use bug bounty programs as a complementary course of action.
   
• Clearly defined, risk-based processes and sufficient resources:
  When launching a new bug bounty program, the organization doesn’t know how many security flaws IT specialists will discover, how serious they will be, and how complex the review process and any necessary action will be. Even large organizations do not possess unlimited resources to review and deal with reports. A risk-based approach is therefore needed when setting up and running the program. Above all else, companies need methods and processes to individually assess the risk that any vulnerability poses to their organization and to intelligently prioritize the order of any remedial measures. Experienced security partners like MHP can provide support in setting up and running these processes.
   
• Ongoing monitoring:
  Organizations should review and manage the efficiency and effectiveness of the new processes through sensible monitoring of any bug bounty initiatives. For example, they can measure the ratio of relevant or serious vulnerabilities to all submitted vulnerabilities. This will give them an overview of how effectively the ethical hacker community is working in their particular case – in other words, whether it is actually reporting back any relevant, previously unknown vulnerabilities.
  Since bug bounty programs run for longer periods of time, companies should also monitor how KPIs like the one mentioned above change over time. This can help to assess the ongoing development of their level of security maturity and the contribution being made to continuous improvement. It goes without saying that the workload and costs associated with running the program should also be measured. Ideally, both aspects should continuously fall in relation to the technical scope.

[1] See Mandiant M‑Trends Report 2025
[2] https://www.bitkom.org/Presse/Presseinformation/Wirtschaftsschutz-2024