Python Error Handling Patterns

Design error handling for my Python application:

Application type: [WEB API/CLI/LIBRARY/SERVICE]
Current code:
```python
[PASTE YOUR CODE]
```

Requirements:
1. Custom exception hierarchy
2. Exception chaining
3. Context managers for cleanup
4. Retry mechanisms
5. Graceful degradation
6. Error logging
7. User-friendly error messages
8. API error responses
9. Exception documentation
10. Testing error conditions

Also consider:
- When to use exceptions vs return values
- Handling third-party exceptions
- Async exception handling
- Monitoring and alerting