UK Regulator Admits TREX to Sandbox for Climate Analysis Testing

As global climate change intensifies, traditional linear financial models are increasingly unable to assess the cascading, nonlinear effects of extreme weather on the financial system. Financial institutions urgently need more precise tools to strengthen their resilience to climate risk and address the systemic physical risks and transition challenges that climate tipping points and compound disasters, including wildfires and storms, pose to assets and portfolios.

The UK Financial Conduct Authority said on July 13, 2026, that it had admitted climate-risk analytics firm TREX to its regulatory sandbox, making it the first company approved to test a nonlinear climate scenario analysis model. The FCA had previously noted that climate disasters such as storms and wildfires accounted for as much as 92% of global insured losses in 2025, underscoring the urgent need for new assessment tools. It also plans to launch a broader climate scenario testing program later in 2026.