A loose cam chain will affect valve timing enough that it will cost you some horsepower and a little engine efficiency. If it continues to develop slack and the cam chain tensioner doesn't ratchet enough to re-tension it again bad things can happen.
I know someone that had a loose cam chain that actually skipped some teeth on the cam chain drive sprocket. When this happened the pistons struck all eight exhaust valves, followed by striking four intake valves. It bent both cams, destroyed the cam holders and split the cylinder head. Then, before the top of the engine could be repaired the whole crank/piston/rod bottom end assembly had to come out and be inspected for damage. Expect this kind of repair to run in the $5k range. This unfortunate schmuck had this happen last fall and still doesn't have his bike back on the road today :dribble: After seeing this catastrophe I’ve become an advocate of cam chain and chain tensioner maintenance.
I'm with Ashe, change the chain, it is cheap (and inexpensive too) and wears. If you can find some way to do this in conjunction with a valve check, do it, because it chain involves the same work as an adjustment.
The cam chain is driven by a gear on the end of the crankshaft. It makes a very long run up the right side of the engine to the cylinder head. Along this long run up to the cams it passes over the cam chain tensioner and slipper which removes any slack. It loops over the intake and exhaust cam gears to drive them. This is the fundamental mechanical timing of your engine. This is what keeps the pistons and valves doing a synchronous dance. This mechanical timing allows the breath-in/breath-out; compress/power cycles to occur only at the appropriate times. It also makes sure the valves are safely pulled up into the cylinder head before the piston comes all the way up, and makes sure that the valves don’t try to open when the pistons are at top-dead-center.
