It is not a thing. Loop stress just makes them more resilient and persistent and better equipped and makes reinforcements more numerous, but even at super high loop stress I could snipe someone mid-conversation and the person talking to them wouldn't notice if my shot was out of ear range.
The popup is actually kinda hazy on what loop stress does. Some people assumed it makes the AI smarter because otherwise why would the enemies be so dumb, right? Surely not just a buggy AI they'd patch two months after release. But no, enemies didn't become any smarter. Specifically, one of the devs on a french forum said it affects their reaction times, aim, fire rate, how many would fire at you at the same time, and for how long they'd search for you after noticing you.