Paracord is made of nylon. And although individual nylon strands will not absorb water (like a cotton fiber will), if you put a bunch of nylon strands together (like paracord) they will hold water until given time to dry. As a result, a wet cord-wrapped handle may cause the steel underneath to rust, even if it is stainless steel (stainless will rust).
However, unlike natural materials like leather, nylon won't rot or expand or tighten as a result of getting wet.
Personally, I don't like paracord wrapped handles. Nylon isn't exactly a grippy material. In fact, it's quite slick. Such handles also do a great job of trapping dirt, dust, blood, grime, etc.
Just my opinion but, just because people use something to make a knife handle doesn't mean it will be a good knife handle.