A number of controllers have had those built in over the years, so it's certainly a workable idea, as long as there's room so that the exposed bits of the switch/contacts don't touch anything, or you heatshrink/insulate it all against the possibility.
However, if the switch isn't completely waterproof, it can get destroyed by enough moisture getting into it. Even here in dry Phoenix, there's still enough occurences of that to have nuked a couple of such switches built into the ends of controllers, including one on a Grinfineon that has a water-resistant flexcap over the rocker switch. (the controller itself is still in use on the SB Cruiser; I just wired around the switch inside).