No idea. I never tried to open the encoder up to see how its made inside (In fear of possibly not being able to put it back together), so i just attached the top back down to the body and called it fixed.
Im guessing trough continued knob wobbling the encoder might become even looser and stop working at some point.
These HP rack mount PSUs all tend to be very easy to take apart, so you don't have to worry about opening it up, service manual probably also shows you exactly how to get to the front panel PCB. If anything its worth cleaning out the dust inside.