Cayman will inevitably see an effect from the Paradise Papers media reports based on data from offshore law firm Appleby, but for panelists at the Campbells Fund Focus conference, the greater consequences will be in terms of data security rather than any reputational damage.

Given the media hype over offshore structures, clients could potentially prefer regulated structures, said David Selden, a partner at Fried Frank in London: “It is not a helpful thing.”

However, the Cayman Islands would continue to serve a purpose. International regulators and tax authorities are already all over automatic exchange of tax information, transparency and the interconnectedness of regulatory systems, he said, adding, “They get it and I don’t think the Paradise Papers is going to change that.”

Instead, Mr. Selden believes the impact will show in an increased focus on the systems and security of service providers and financial institutions, who are forced to improve their defenses against cyberattacks.

“We already felt we had good systems, but we had to bring it up a couple of notches. I think you are going to see more of that in Cayman,” he said.

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Ben Pershick, managing director of fund administrator Maitland Financial Group, agreed that the Paradise Papers’ bigger fallout will be on data protection and cybersecurity as opposed to a tax impact.

The Paradise Papers had simply increased the pressure on what was already a very important issue, he said.

William Jones, an independent director and managing partner of ManagementPlus Group, said media events like the Paradise Papers do have an effect. When Luxembourg experienced the Lux Papers, he noted there was a reaction in terms of clients initially staying away.

“That’s inevitable,” he said.

But he argued that it should not affect Cayman in the long term.

“The reason is that Cayman gets a bum rap,” he said.

The focus of negative reactions toward Cayman in Europe and the U.S. is the perception that the investors in a fund in Cayman do not pay tax. To the extent that this was possible, a simple fix of onshore legislation could easily eliminate it, he argued.

Cayman, in turn, simply prevents double taxation at the vehicle level to the benefit of everyone involved.

Nevertheless, Cayman is viewed as a headline risk. Mr. Jones said that when a large investment fund quizzed its top 20 clients about Cayman 15 months ago, immediately after the Panama Papers, the majority said, “don’t show us Cayman structures anymore.” Earlier this year when asked the same question the reaction “had calmed down.”

“None of those clients said there is anything wrong with Cayman. Cayman works really well, it’s a fantastic structure, it’s efficient, but they did not want to take the headline risk.”

This effect is only temporary, he said: “People have short-term memories, as we know.”

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