Bloomberg has enhanced its risk management solutions with the addition of the MARS Climate module.
This innovative tool is designed to assist portfolio and risk managers in quantifying and managing the financial impacts of climate change on their investments.
The need for such a product has become increasingly urgent as regulatory bodies worldwide mandate that financial institutions evaluate their climate risk exposure. This directive is driven by robust data linking climate change to significant economic disruptions.
Bloomberg’s core function revolves around providing comprehensive financial data and analytical tools to a broad spectrum of clients including top financial institutions, government agencies, and corporate clients. This positions the company as a pivotal player in integrating climate risk considerations into mainstream financial analysis.
The newly launched MARS Climate module is a testament to Bloomberg’s commitment to innovation. It offers a detailed framework for analyzing the financial implications of various climate scenarios. These assessments are aligned with the Network for Greening Financial System’s (NGFS) guidelines and utilize BloombergNEF’s Transition Risk Assessment Company Tool (TRACT). TRACT evaluates potential revenue risks and opportunities by considering the company-specific activities, supply chain impacts, and geographical influences under different climate projections.
The module provides a granular analysis of climate-related risks, categorized into physical acute, physical chronic, and transition risks. Each report generated by MARS Climate offers insights right down to the security level, enabling detailed risk assessment and strategic planning.
MARS Climate can be accessed through the Bloomberg Terminal, using the command {MARS CLIMATE <GO>}. This integration ensures that users can seamlessly manage various types of risks including market, credit, and operational, alongside climate risks, using Bloomberg’s unified pricing and data framework.
Additional features of MARS Climate include support for managing XVA counterparty risks, hedge accounting, and compliance with collateral and SIMM requirements, ensuring that firms can maintain coherence in risk assessment and management across their financial portfolios.
Dharrini Bala Gadiyaram, Global Head of Risk Product at Bloomberg, emphasized the importance of this integration. “Portfolio and risk managers increasingly look to perform climate risk analysis alongside other financial risk assessments to manage risk and regulatory reporting. As we continue to expand our climate risk solutions across Bloomberg, the latest addition to our widely used risk management offering, MARS Climate, will enable users to assess portfolio vulnerabilities and opportunities related to climate change.”
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