i. Main Approaches to Managing the Risk:

1. Risk Prevention:
   • This approach focuses on designing and implementing controls that reduce the likelihood of fraud or theft occurring. Preventive measures include developing comprehensive policies, implementing procedures and controls, and conducting activities such as employee training and fraud awareness programs to mitigate risks before they occur.
2. Risk Detection:
   • This approach involves identifying and addressing fraud or theft when it occurs. It includes employing analytical tools and procedures to detect anomalies and irregularities, as well as establishing reporting mechanisms to facilitate the communication of suspected fraudulent activities. Techniques like exception reporting, data mining, trend analysis, and ongoing risk assessment are integral to this approach.

ii. Measures to Provide Protection Against Fraud and Theft:

1. Internal Controls:
   • Implementing strong internal controls such as segregation of duties, formal authorization processes for changes to data and systems, and control over physical access to computer systems. These measures help prevent unauthorized access and activities.
2. Internal Audit:
   • Regular internal audits help detect and prevent fraud by ensuring compliance with policies and procedures. Auditors can identify discrepancies and areas of weakness that might be exploited for fraudulent activities.
3. Use of Digital Certificates and Signatures:
   • Digital certificates and signatures ensure the identity of the correct person accessing the system, especially over the internet. They provide a secure method of authentication and prevent unauthorized access.
4. Encryption:
   • Encrypting sensitive data converts it into a secure format that is not readable by unauthorized users. Encryption is crucial for protecting data integrity and confidentiality, particularly in transit and storage.