Causes:
Wear and tear, aging, physical violence, taking the arms out regularly can also do it. Occasionally a bad batch of plastic slips through quality control.
Prevention:
Keep the original arms in, be gentle and kind, keep in a temperature-controlled environment as major temperature and/or humidity swings may weaken the plastic.
Fix:
Unknown. Perhaps if you were will to get a bit radical, you could attempt to melt the plastic back together.
You might try superglue or something, but I'm not sure what will stick or actually do you any good.
I can't find much on how to fix them. Most recommend buying a replacement, or contacting Lego if it's a newer torso and they may replace it.
For something a bit more...redneck, you could stuff clay/stick-tac into the arm socket and that may help stiffen that joint up. Though it wouldn't help the crack any.