Tier

A "tier" is, originally, a group of rows within a larger group.In theaters, such as for plays (like Shakespearian plays) or for viewing motion pictures (movies), a "tier" of seats is a group of rows of seats. 


The meaning of "tier" has been expanded to mean any large group within an even larger group.

As one example, American banks are required by the Federal Deposit Insurance Corporation (FDIC), which insures individual investor accounts up to $250,000 in the event of a complete bank collapse, to have a minimum of 3% or 4% of "Tier 1 Capital" depending on the classification of bank.

In this case, Tier 1 Capital is composed of different types of capital, all of which fulfill an FDIC-created definition to be classified together as "Tier 1" capital. Therefore, even though the types of capital are different, they are classified as a single group within a larger group (that is, capital of all types).

Tiers are usually assigned numbers in the order of priority. In banking, Tier 1 Capital is the most important kind for measuring the health of a bank (its ability to survive). Thus, this capital is Tier 1, rather than some other number. In other fields, Tier 1 of anything should be assumed to be the most critical of the tiers composing the entirety of the group.